HONG KONG (Reuters) - The dollar slid to a 15-year low against the yen and Asian stocks rose on Monday as U.S. jobs data boosted the chances of easier U.S. monetary policy and IMF and G7 meetings produced little to ease global currency tensions.
Finance leaders meeting over the weekend in Washington produced no quick fix for global economic imbalances, suggesting the cheap money trade of selling dollars to buy emerging market assets and commodities looks set to continue for now.
That was further spurred by weaker-than-expected jobs data in the United States on Friday that raised the chances the Federal Reserve would inject fresh funds into the economy as soon as its November 2-3 meeting.
“We’ve had low interest rates in the most developed economies for some time and we have robust growth and the need to tighten policy elsewhere. That suggests the flows going into the emerging world are going to continue,” said Alan Ruskin, global head of FX Strategy at Deutsche Bank.
The dollar weakened broadly against a basket of currencies and against the yen fell as far as 81.37 yen, its lowest level in 15 years. It later recovered to 81.99.
Although Japan is closed for a national holiday on Monday, the dollar’s slide put markets on alert for potential intervention by the Bank of Japan, especially since the G7 and the IMF didn’t produce any overt criticism of Tokyo’s yen selling.
The MSCI Asia ex-Japan stock index <.MIAPJ0000PUS> rose 0.7 percent on expectations that a flood of investment funds into emerging markets would continue.
Hong Kong shares hit a 2-year peak, breaking out of a trading range that has held since November 2009 and leading a broad rally in Asian markets.
“Investors almost seem to be welcoming weak U.S. jobs data, taking it as a sign the U.S. Fed will offer additional economic support measures,” said Kwak Joong-bo, a market analyst at Samsung Securities in Seoul.
CORN RISES MOST SINCE 1972
The Australian dollar looked set to test a 28-year high of $0.9918 against the U.S. dollar, while shares rose to five-month highs. Australia is emerging as a clear winner in the investment shift to higher yields and commodities.
Shanghai zinc futures rallied almost 5 percent on Monday to their highest level since April, chasing gains in London, while copper rose to six-month high.
Grain prices surged. Chicago corn jumped 8.5 percent for its biggest gain since 1972, boosted by a U.S. government forecast that supplies in the world’s top exporter would shrink to their lowest in 14 years.
Precious metals extended their gains with spot silver hitting a 30-year high and gold rising 0.5 percent to edge back towards a record high reached on Thursday of $1,364.60 an ounce.
Emerging powers won a battle on Saturday for heightened IMF scrutiny of rich countries’ economic policies as world financial leaders sought to defuse mounting tensions over currencies.
Investors will get earnings reports this week from bellwether U.S. corporations including Google, GE and JPMorgan Chase & Co, although the short-term direction of stocks is likely to be dominated by the possibility of more cheap money flowing in the from the Fed.