TOKYO (Reuters) – Asian stocks gained early on Thursday, cheered by the Dow Jones Industrial Average breaching past the 20,000-level threshold for the first time though concerns about U.S. President Donald Trump’s protectionist stance kept the dollar on the defensive.
MSCI’s broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) tacked on 0.3 percent.
Safe-haven U.S. Treasuries were duly sold as risk aversion ebbed and the benchmark 10-year note yield (US10YT=RR) rose to a four-week high on Wednesday. Subdued investor demand at a five-year auction also hurt Treasuries.
The dollar, which often draws support from higher Treasury yields, failed to follow suit, with an index tracking the greenback against a basket of major currencies (DXY) sliding to a seven-week low of 99.335 on Wednesday.
Unlike equities, the currency markets focused more on Trump’s trade protectionism and the negative impact it could have on the dollar.
“The problem that the greenback is having right now is two fold – first Trump has been talking down the currency and second, his policies make foreign investors nervous,” wrote Kathy Lien, managing director of FX strategy for BK Asset Management.
“Until the market comes to terms with the risk/benefits of Trump policy, the dollar may have a tough time mimicking the one way moves in stocks and bonds.”
The dollar was little changed at 113.420 yen <jpy=>after losing 0.45 percent overnight. It had soared to a 10-month high of 118.660 in mid-December at the apex of the dollar-boosting Trump trade, when market focus was on bets of more fiscal stimulus and reflationary measures under the new administration.
The euro was steady at $1.0748 <eur=>after gaining 0.2 percent the previous day. The common currency had risen to a 1-1/2-month high of $1.0775 on Tuesday against the struggling dollar.
The pound hovered near a six-week high of $1.2640 <gbp=d4>touched earlier on Thursday. Sterling has drawn its latest boost from expectations that British Prime Minister Theresa May’s upcoming meeting with Trump would pave the way for a rapid U.S. trade deal.
In commodities, crude oil prices bounced amid the dollar’s weakening after falling the previous day on data showing a build in U.S. crude inventories.
U.S. crude (CLc1) was up 0.5 percent at $53.02 a barrel after losing 0.8 percent the previous day.
A weaker greenback tends to favor non-U.S. buyers of dollar-denominated commodities like crude.