(Bloomberg) -- The dollar declined with Treasury yields amid uncertainty about the prospects of U.S. tax cuts and as investors digested news that President Donald Trump will pick Jerome Powell to lead the Federal Reserve.
A rally in Asian stocks that drove prices to the highest level in 10 years showed signs of tiring as U.S. equity-index futures slipped. Powell, a governor on the Fed board who's never differed with Chair Janet Yellen on policy decisions, will be nominated by Trump to succeed her, according to three people familiar with the decision.
Investors remain focused on the progress toward American tax reform, corporate earnings and Friday's U.S. jobs report. There have been conflicting reports when and how the U.S. tax rate on companies would be lowered.
In Japan, a boost to Honda Motor Co.'s profit outlook lifted its shares and helped other transportation stocks drive the Topix index to the highest level since February 2007. Still, gains were kept in check as the yen jumped along with other G10 currencies. Oil prices hovered near their peak for the year.
Trump has said he'll announce his Fed pick Thursday. Powell will inherit a central bank that anticipates eventually reaching its 2 percent inflation target, given a strengthening labor market and solid economic activity. The succession question overshadowed the Fed's policy statement Wednesday, where it subtly upgraded its assessment of the economy and reinforced expectations of a December interest-rate hike.
Meantime, anything other than a rate hike from the Bank of England on Thursday would be a surprise to markets. Governor Mark Carney may signal even more tightening if the economy performs in line with new forecasts, but that's unlikely, according to Bloomberg Intelligence. Officials will probably lift the growth outlook for 2018 and lower it for 2019. Inflation forecasts may be raised for this year and left unchanged for next.
Terminal users can read more in our Markets Live blog.
Here are some of the remaining scheduled events this week:
- Trump starts an 11-day trip to Asia, his first as president, on Friday. Trade and security issues -- particularly North Korea -- will probably be in focus.
- The slew of earnings releases will culminate with Apple Inc. results.
And these are the main moves in markets:
Stocks
- Japan's Topix finished the session in Tokyo 0.4 percent higher, while the Nikkei 225 Stock Average advanced 0.5 percent
- Australia's S&P/ASX 200 Index dipped 0.1 percent and South Korea's Kospi index lost 0.4 percent, while Hong Kong's Hang Seng Index was down 0.1 percent. The Shanghai Composite Index declined 0.5 percent.
- Futures on the S&P 500 were down 0.2 percent. The underlying gauge rose 0.2 percent Wednesday.
Currencies
- The Bloomberg Dollar Spot Index declined 0.3 percent. It fell as much as 0.4 percent, the most in more than three weeks.
- The yen advanced 0.2 percent to 113.95 per dollar after decreasing 0.5 percent Wednesday to near the weakest level since July.
- The euro was up 0.3 percent at $1.1652.
- Australia's dollar climbed 0.5 percent to 77.10 U.S. cents, and the Kiwi rose 0.5 percent to 69.22 cents.
Bonds
- The yield on 10-year Treasuries fell more than 1 basis point to 2.36 percent.
- Australia's 10-year yield declined 5 basis points to 2.65 percent.
Commodities
- West Texas Intermediate crude was flat at $54.29 a barrel.
- Gold was up 0.2 percent at $1,277.65 an ounce.
- The Bloomberg Commodity Index rose 0.1 percent, up for a fourth day, to the highest level since March.
To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net, Andreea Papuc in Sydney at apapuc1@bloomberg.net.
To contact the editor responsible for this story: Christopher Anstey at canstey@bloomberg.net.
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