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    Asian Session – Dollar bounces from near 4-month lows but equities still under pressure

    Asian stock markets were in negative territory again on Wednesday as fears about global growth and the health of banks continue to weigh on equities. Tokyo’s Nikkei 225 index shed another 2.3%, while Sydney closed 1.2% lower.  Chinese markets remain closed for the week for the Lunar New Year celebrations.

    The dollar index, which measures the US dollar against a basket of currencies, hit a near 4-month low of 95.66 on Tuesday but had firmed to 96.09 in late Asian trading today. The greenback fell below 115 yen yesterday for the first time in 15 months and has been hovering around that level since.

    The Australian dollar was back above 0.70 versus the greenback after dropping below the level yesterday. An improvement in the Australian Westpac consumer confidence survey for February had limited impact on the aussie, which was last trading at 0.7081.

    The euro was steady around 1.1290 dollars for much of the Asian session but dipped slightly on much worse-than-expected industrial production figures from France. French industrial output contracted by 1.6% month-on-month in December, which was below estimates of a 0.1% increase.

    The single currency was also stable against sterling at 0.78 pounds but was unable to hold on to the 130 handle against the yen.

    Eurozone government bond yield spreads narrowed on Tuesday, supporting the euro, while 10-year Japanese government bond yields rose back above zero as safe-haven buying moderated.

    The pound stood firm around 1.4460 dollars as it awaits the latest industrial and manufacturing production numbers out of the UK later today.

    In commodities, gold prices have eased back from 8-month highs set at the start of the week but the ongoing risk off sentiment has held prices around $1190 an ounce.

    Crude oil was boosted today on reports that Iran is willing to cooperate with Saudi Arabia to limit supply. US crude oil futures were up 2.2% as a result to climb to $28.55 a barrel.

    Looking ahead to the rest of the day, all eyes will be on Fed Chair Janet Yellen’s testimony to Congress where she is likely to comment on the outlook for the US economy and the expected path of interest rates.

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