Pedestrians cross a road in front of an electronic board showing various stock prices outside a brokerage in Tokyo July 22, 2014.
Credit: Reuters/Yuya Shino
TOKYO
(Reuters) – Asian stocks dipped in early trade on Monday after disappointing earnings hit Wall Street, while the dollar hovered near six-months peaks against a basket of major currencies.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.1 percent, taking cues from Wall Street where lackluster results from bellwether names Visa and Amazon triggered a discretionary sell-off on Friday.
Tokyo’s Nikkei shed 0.2 percent after hitting a six-month closing low on Friday.
The euro traded little changed at $1.3434, within close reach of $1.3421 plumbed on Friday, its lowest since November 2013.
The euro, already under pressure from a range of factors including expectations of further easing by the European Central Bank and diverging interest rates seen favoring the U.S. over Europe, took another hit on Friday when Germany’s Ifo business climate index painted a gloomy picture of the economy.
Focus turned to this week’s run of U.S. data for directional cues on the euro and dollar, including the Case-Shiller price index on Tuesday, second quarter GDP due on Wednesday and non-farm payrolls on Friday.
“We should brace for the euro breaking below key support at 1.34 given diverging U.S. and European monetary policies. Dollar buying pressure is building as shown by the strength of the dollar index, which this week’s data, if upbeat, could enhance further,” said Junichi Ishikawa, market strategist at IG Securities in Tokyo.
The two-day Federal Reserve policy review ending on Wednesday was also in focus but expectations were for Chair Janet Yellen to deliver the usual dovish message.
The dollar index, a gauge of its strength against a basket of key currencies, stood little changed at 81.305 after striking a near six-month high of 81.804 on Friday.
The dollar fetched 101.77 yen, having lost a bit of momentum after climbing to a two-week high of 101.94 on Friday.
While the attention of equity and currency markets has shifted towards major corporate earnings and macroeconomics, geopolitical issues remained a key factors in commodities such as oil.
Brent crude LCOc1 traded little changed at $108.25 a barrel after climbing more than $1 on Friday as fighting in Ukraine and deteriorating relations between Russia and the United States ignited new fears of supply disruptions. [O/R]
(Editing by Eric Meijer)