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    Asian Session – Equities and commodities extend gains on dollar weakness

    Asian equity markets opened broadly higher on Friday following a strong performance on Wall Street on Thursday. The Dow Jones and S&P500 both closed at the highest since December 31st, wiping out all of the yearly losses to date. In China, the Shanghai Composite index closed up 1.7%, boosted by a strong rise in new home prices in February, particularly in large cities.

    Stocks in Tokyo lost out though due to the strong yen which is seen as negative on Japanese corporate earnings. The dollar was stuck near 17-month lows versus the yen and was last trading at 111.29 yen.

    The yen’s recent appreciation has increased speculation about whether Japan will intervene to lower the yen’s exchange rate. Japan’s Finance Minister Taro Aso told reporters today he will “pay close attention to market moves”.

    Meanwhile, the minutes of the Bank of Japan’s January meeting published today revealed policy board members considered expanding the size of the asset purchase program but opted for negative interest rates instead.

    The Chinese yuan benefited from the dollar weakness to rise to its highest since December. The People’s Bank of China set a midpoint of 6.4628 per dollar on Friday, which is 0.5% firmer than Thursday’s fix.

    In European currencies, the euro climbed to a one-month high of 1.1342 dollars on Thursday but dropped below 1.13 dollars at the start of European trading today after weaker-than-expected producer price inflation figures out of Germany. The single currency was also down against the yen and the pound at 125.54 yen and 0.7815 pounds.

    Sterling also rose to one-month highs against the dollar to briefly peak above 1.45 dollars. The pound was given a boost yesterday by the Bank of England’s latest meeting minutes which said that interest rates are more likely to go up than not.

    Crude oil prices rose sharply yesterday on optimism that a meeting between major oil producers on April 17 will produce a deal to limit supply. Brent crude rose back above $41 a barrel, while US oil futures rose above $40 a barrel for the first time since early December.

    In other commodities, copper prices rose to the highest since November to climb to $2.3145 per pound and gold was slightly firmer on Friday at just below $1260 an ounce.

    Coming up later today, it will be relatively quiet for European data but Canadian CPI and retail sales figures, as well as the latest University of Michigan confidence survey in the US will be watched. A speech by New York Fed President William Dudley later today may also attract some attention.

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