Both the dollar and the euro extended their gains on the yen, with
the single currency hitting a five-year high in what should be a
boost to Japanese exports, profits and stocks.
A Reuters poll found confidence at Japanese manufacturers rose for a
second month to a three-year high in December, adding to the
evidence of steady recovery in the world's third-largest economy.
The Nikkei share index <.N225> jumped 1.8 percent and was fast
approaching last week's peak at 15,794. South Korean stocks <.KS11>
added 1 percent and MSCI's broadest index of Asia-Pacific shares
outside Japan <.MIAPJ0000PUS> gained 0.2 percent.
While Friday's solid U.S. jobs report may have brought forward the
day when the Federal Reserve starts tapering its asset buying, the
figures also suggested the economy was recovering well enough to
withstand the move.
A total of 203,000 jobs were added in November, while the
unemployment rate dropped three-tenths of a percentage point to a
five-year low of 7 percent. <TOP/CEN>
"Markets are trading like they were well positioned for strong data,
and would actually be relieved if the Fed tapers in December and so
removes the tapering timing uncertainty," said Alan Ruskin, global
head of FX strategy at Deutsche Bank in New York.
"That equities are this strong is a clear signal to the Fed that
tapering will not do too much damage to risk appetite."
On Wall Street, the Dow Jones industrial average <.DJI> ended Friday
with a gain of 1.26 percent, while the S&P 500 <.SPX> put on 1.12
Treasuries also proved resilient, with 10-year yields settling back
at 2.86 percent after a brief spike to 2.93 percent immediately
after the jobs report.
The Fed has also had some success in convincing investors that
tapering is not tightening, and that interest rates will remain low
for a long time to come.
Fed funds futures are not fully priced for a hike until the very end
of 2015, while yields on two-year Treasuries have held around 30
basis points for weeks now.
[to top of second column]
The improvement in risk appetite knocked safe havens like the yen,
lifting the U.S. dollar to 103.07 yen early Monday and near last
week's highs around 103.37.
The euro had shot up to 141.29 yen, territory not visited since
October 2008, while also making ground on the U.S. dollar. It
briefly touched $1.3747 early on Monday before edging back to
The common currency has been underpinned by rising short-term
interest rates after the European Central Bank dampened hopes for an
imminent easing move.
Aiding sentiment in Asia was a set of robust trade numbers from
regional powerhouse China. China's exports came in well above
forecasts in November, rising 12.7 percent from a year earlier,
while imports rose 5.3 percent.
"The strength is likely supported by the recent improvement in
global manufacturing activity, as evidenced by the strong PMI prints
in major advanced economies," wrote analysts at Barclays in a note.
That should be positive for many commodities with China importing a
record amount of iron ore in November, while oil imports rebounded.
Prices for the steel-making mineral have been surprisingly firm
around $139 a tonne recently, good news for Australia as it is the
country's single biggest export earner.
That helped the Australian dollar nudge ahead to $0.9105 early
Monday, well up from Friday's lows around $0.8989.
U.S. crude oil futures were trading 4 cents firmer at $97.69, having
surged more than 5 percent last week. Brent edged up 2 cents to
$111.63 a barrel.
Gold has not been so fortunate, with the metal stuck at $1,227.46
and only just above five-month lows.
(Editing by Dean Yates and Chris
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