Shares in Asia rally, dollar lower against yen on Fed rate cut bets
U.S. shares rallied on Monday on generally positive earnings reports and increasing bets for a September rate cut from the Fed after disappointing jobs data on Friday.
Oil remained lower after output increases by OPEC+ and threats by U.S. President Donald Trump to raise tariffs on India over its Russian petroleum purchases. Japan's Nikkei rallied, with data showing a jump in the nation's service sector activity in July.
"There are signs of weakness in parts of the U.S. economy, that plays to the view that maybe not in September, but certainly this year that the Fed's still on course to ease potentially twice," said Rodrigo Catril, senior currency strategist at National Australia Bank.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab was up 0.6% in early trade. The Nikkei climbed 0.5% after falling by the most in two months on Monday.
The dollar dropped 0.1% to 146.96 yen . The euro was unchanged at $1.1572, while the dollar index , which tracks the greenback against a basket of major peers, edged up 0.1% after a two-day slide.
Odds for a September rate cut now stand at about 94%, according to CME Fedwatch, from a 63% chance seen on July 28. Market participants see at least two quarter-point cuts by the end of this year.
The disappointing nonfarm payrolls data on Friday added to the case for a cut by the Fed, and took on another layer of drama with Trump's decision to fire the head of labor statistics responsible for the figures.
News that Trump would get to fill a governorship position at the Fed early also added to worries about politicisation of interest rate policy.
Trump again threatened to raise tariffs on goods from India from the 25% level announced last month, over its Russian oil purchases, while New Delhi called his attack "unjustified" and vowed to protect its economic interests.
Second-quarter U.S. earnings season is winding down, but investors are still looking forward to reports this week from companies including Walt Disney (DIS.N), opens new tab and Caterpillar (CAT.N), opens new tab.
Tech heavyweights Nvidia (NVDA.O), opens new tab, Alphabet (GOOGL.O), opens new tab and Meta (META.O), opens new tab surged overnight, and Palantir Technologies (PLTR.O), opens new tab raised its revenue forecast for the second time this year on expectations of sustained demand for its artificial intelligence services.
"Company earnings announcements continue to spur market moves," Moomoo Australia market strategist Michael McCarthy said in a note.
In Japan, the S&P Global final services purchasing managers' index climbed to 53.6 in July from 51.7 in June, marking the strongest expansion since February.
Oil prices were little changed after three days of declines on mounting oversupply concerns, with the potential for more Russian supply disruptions providing support.
Brent crude futures were flat at $68.76 per barrel, while U.S. crude futures dipped 0.02% to $66.28 a barrel. Spot gold was slightly higher at $3,381.4 per ounce.
The pan-region Euro Stoxx 50 futures were up 0.2%, while German DAX futures were up 0.3% and FTSE futures rose 0.4%. U.S. stock futures, the S&P 500 e-minis , were up 0.2%.
Bitcoin was little changed at $114,866.06 after a two-day rally.
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