Asian shares edged up on Thursday as stimulus expectations and a rise in the yuan helped Chinese equities erase early losses, while markets awaited more news on U.S.-China trade talks amid hopes that an all-out trade war can be averted. Broader market sentiment was bolstered in early Asian trade amid signs of progress in U.S.-China trade talks. Trade tensions between the world’s two largest economies had rattled markets for most of last year. The dollar was under pressure early on Thursday on growing expectations the Federal Reserve will pause its rate tightening cycle this year, while optimism about the Sino-U.S. trade talks reduced demand for safe-haven assets. Minutes from the Fed’s Dec.18-19 meeting revealed that several policymakers were in favour of the US central bank keeping rates steady this year.
EURUSD and GBPUSD each gained marginally on the dollar, fetching $1.1547 and $1.2794 respectively. However, traders expect the strength in both these currencies to fade in the coming weeks. Economic data in the eurozone has remained consistently weaker than estimates over the last few months, especially in France and Germany, the eurozone’s economic powerhouses. The European Central Bank is widely expected to remain accommodative in 2019, which should keep a lid on the single currency. Brexit woes are most likely to dominate sentiment towards sterling. Britain’s Prime Minister Theresa May must win a vote in parliament to get her Brexit deal approved or risk seeing Britain’s exit from the European Union descend into chaos. The vote is now due to take place the week beginning Jan. 14.
Oil also caught investors’ attention after U.S. crude and Brent jumped overnight, helped by optimism over easing Sino-U.S. trade tensions, while OPEC-led crude output cuts also provided support. U.S. West Texas Intermediate crude futures gained almost 5.2 percent, while Brent crude futures rose more than 4.6 percent, extending a rally that has pushed futures up about 14 percent this year.
Gold prices were 0.2 percent higher at $1,296.40, edging towards a near seven-month peak of $1.298,60.