The dollar hit a 2-year high after strong US data bet on rate cuts

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The dollar rose to a two-year high against major currencies on Monday after strong US jobs data late last week prompted traders to cut expectations of an interest rate cut by the Federal Reserve. Reserve.

The dollar index, which tracks the US dollar against the yen, euro and other major currencies, hit its highest level since November 2022, with the pound down 0.5 percent to $1.216 – a new 14-month. Investors expect that a strong US economy could slow the Fed’s pace of interest rate cuts, taking investment out of the markets others.

Stocks in China, India, South Korea and Australia also fell on Monday after the US payrolls report on Friday showed 256,000 jobs were added in December, matching previous consensus estimates.

“People are surprised by the economic strength of the US,” said Jason Lui, head of Asia-Pacific equity and strategy at BNP Paribas. “When American interest rates are so high, you’re going to have a shortage of money in Asia, and money going into the United States or staying there.”

Australia’s S&P/ASX 200 index fell 1.2 percent, while South Korea’s Kospi fell 1.1 percent. India’s Sensex fell 0.8 percent. Japanese markets are closed on Monday.

Sunil Tirumalai, head of Asia equity strategy at UBS, said: “Emerging funds do well when US interest rates are low. “Financials are not shrinking and weak currencies mean space. less to reduce the rate of Asia.”

Hong Kong’s Hang Seng index fell 1.2 percent, while China’s CSI 300 fell 0.5 percent.

“The (Chinese) onshore market is still more stable compared to the external noise,” said Lui, who said domestic investors have been withdrawing money from yield savings accounts. lower in the equity market.

However, China’s sovereign wealth funds have fallen 17 percent since their peak on October 8 last year, as hopes of a bazooka-style stimulus from Beijing faded and worries about the impact of Donald Trump’s second term economy in the market.

“Some of the stimulus measures have been a surprise,” said Tirumalai, who admitted that China is still in a “bear market”. “The expansion of the business plan to a much broader range of consumer goods for example has arrived earlier than we thought.”

Oil prices rose to a four-month high after the US announcement imposing new sanctions on Russian oil on Friday.

Brent crude prices, the international benchmark, rose 1.6 percent to $81 a barrel, while the US gauge of West Texas Intermediate gained 1.7 percent to $77.90 a barrel.