The European Central Bank held interest rates steady at 0 percent on Thursday. ECB President Mario Draghi said the central bank would be prepared to make a decision on its quantitative easing program at its October meeting. For now, the central bank’s net asset purchases of 60 billion euro a month would continue to the end of the year “or beyond, if necessary,” Draghi said.
In reaction, the euro spiked to $1.204 against the dollar from around $1.1970 before Draghi’s press conference began on Thursday. The common currency extended gains to trade at a fresh 2-1/2-year high of $1.2064 at 12:06 p.m. HK/SIN.
“The euro shot higher because Draghi made it very clear that it is not a question of if, but a question of when they would start tapering asset purchases,” said Kathy Lien, managing director of FX strategy at BK Asset Management, in a note.
The dollar tumbled further on Friday after falling sharply overnight. The dollar index, which tracks the greenback against six currencies, last stood at 91.174, compared with levels around the 92 handle over the past two weeks.
Against the Japanese currency, the dollar fetched 108.15 yen, below levels around 108.41 seen in the last session. The dollar also slid against other Asian currencies, with the New Zealand dollar gaining more than 1 percent against the greenback by 12:10 p.m. HK/SIN.
Stephen Innes, APAC head of trading at OANDA, said traders were concerned with the impact Hurricane Harvey might have on data that could eventually lead “the Fed to sit on their hands for the rest of 2017.” Higher-than-expected U.S. jobless claims and geopolitical concerns also weighed on the currency, Innes said.
Tepid moves in the market could also be due to investor concerns over North Korea. The hermit state will celebrate a national holiday on Saturday and experts believe it could launch another missile then.
“The next event risk for global markets is North Korea’s Foundation Day tomorrow, Sept. 9, possibly the key date for the highly-publicized intercontinental ballistic missile launch. Markets may decide to close of positions ahead of this possible event,” ING Asia Head of Research Rob Carnell said in a note.
In corporate news, Apple is being pursued as a potential partner by three separate groups — including a consortium which counts Western Digital as a member — making offers for Toshiba‘s memory chip business, Nikkei Asian Review said Friday.
Western Digital is attempting to secure just below 16 percent of Toshiba’s chip unit on the assumption of a future listing, Reuters quoted Japanese media as saying.
Taiwan’s Hon Hai Precision Industry Co, or Foxconn Technology Group, has also continued to push its case for buying Toshiba’s memory unit, according to media reports. Hon Hai’s bid has support from Apple, Softbank and Sharp, Bloomberg said, citing a Hon Hai spokesperson. Toshiba’s shares rose 0.31 percent, while Hon Hai shares were up 0.87 percent.
In individual stocks, South Korean automaker Hyundai Motor fell 2.54 percent and auto parts supplier Hyundai Mobis tumbled 6.14 percent. The moves followed Reuters headlines that the automaker had resumed operations at its China plant on Thursday after an incident earlier in the week over payment issues with a German supplier. Hyundai Motor’s joint venture partner BAIC Motor reportedly preferred more affordable local suppliers, Reuters said.
Still, the tiff was likely “more of a show,” Daiwa Capital Markets analyst Sung Yop Chung wrote in a Sept. 7 note. BAIC was unlikely to terminate its joint venture with Hyundai as the sunk cost burden would be great, but sentiment could remain “choppy” in the short term, Sung added.
Energy markets were also cautious about the approach of Hurricane Irma, which could disrupt crude shipments, Reuters added.
Meanwhile, China foreign exchange reserves added almost $11 billion in August to $3.092 trillion, Reuters reported on Thursday. That was the seventh consecutive month in that China’s reserves have risen, Reuters said.
Before the market open in China, China’s central bank set the yuan midpoint stronger for a tenth consecutive day, according to Reuters. Friday’s midpoint stood at 6.5032 to the dollar. The People’s Bank of China allows the yuan spot rate to rise or fall a maximum of 2 percent against the dollar, relative to its fixing rate.
The on-shore yuan traded at 6.4502 to the dollar at 12:20 p.m. HK/SIN after strengthening to trade as high as 6.4471 earlier. In the offshore market, the Chinese currency traded at 6.4610 to the dollar.
Stateside, major indexes closed mostly flat after financials and media stocks weighed on the broader market. The Dow Jones industrial average declined 0.1 percent, or 22.86 points, to close at 21,784.78.