- Asian stocks drop, following U.S. market selloff on Monday
- Dollar gauge's relative-strength index had briefly topped 70
The dollar fell against most of its 16 major peers, suspending a rally that began in mid-October, as global equities stalled on concern an increase in Federal Reserve interest rates next month could erode asset prices.
The greenback remained more than 1 percent stronger against all but two of those currencies since the start of the month, after a jobs report last week bolstered bets the Fed will tighten policy at its December meeting. The dollar was little changed against the yen and euro on Tuesday, holding close to a six-month high against the single currency.
The MSCI Asia Pacific Index of stocks dropped 0.7 percent after the Standard & Poor’s 500 Index retreated 1 percent on Monday. The Stoxx Europe 600 Index was little changed Tuesday at 8:54 a.m in London.
“The dollar is pausing from its rally as markets may have raced ahead on Fed rate hike expectations for December,” Hiroyuki Yamamuro, an analyst in Tokyo at Ueda Harlow Ltd., which provides margin-trading services, wrote in a note to clients. “Dollar bullish sentiment can’t be sustained without support.”
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed after touching its highest level since at least 2004. On Nov. 6 it surpassed a technical position that for some traders signaled the gauge’s gains were excessive.
The U.S. currency was at 123.26 yen, just below the 123.60 level reached on Monday, its highest since Aug. 20. It was at $1.0754 per euro, after reaching $1.0707 on Nov. 6, the strongest since April 23.
Bloomberg’s Dollar Spot Index was at 1,231.84, after reaching 1,234.63 Monday, the highest level in data going back to December 2004. A measure of the greenback’s momentum, known as the 14-day relative strength indicator, was at 69.5, compared with the 70 level some traders view as a signal the currency is overbought.
“For the dollar to test its upside against the yen, stocks need to maintain gains and U.S. yields must rise,” said Junichi Ishikawa, an analyst at IG Markets in Tokyo.