USD Benefits from Drop in Asian Equities

The dollar consolidated recent gains in Asian trading, with Kiwi the only currency able to make fresh highs against the USD today, with EUR, GBP, AUD and CAD consolidating under recent highs. EUR-USD for instance has held a very tight range of 1.4403-23 since the Tokyo open. A key factor tempering the further currency gains was the pullback in Asian stocks with the Shanghai index down over 1% and DJIA futures slightly weaker as well. USD-JPY has eased from 95.37 morning highs to 95.00 in reaction to the weaker stocks with EUR-JPY also retreating from highs of 137.53 in early Tokyo trading to current levels of 136.93. The failure to make fresh gains, the weaker stocks and warnings from BHP and Xstrata about elevated commodity prices suggest that a period of correction is possible in stocks, commodities and currencies that could benefit the dollar.