South Korea Cuts Rates, Pushes Dollar Down

In the Asian market, the stocks finally lost some of their gains from the last several days. While the USD keeps weakening, the JPY is getting stronger.

In overnight trading, the Central Bank of South Korea cut their interest rate after cuts in Australia, Europe and India. South Korea dropped its rate a quarter of a percent from 2.5 per cent to 2.25 per cent. This marks the 1st cut seen there in over seven months. While Japan has been weakening its JPY aggressively, making exports cheaper, South Korea has been struggling to compete. Exports make up more than 50 per cent of the South Korean economy. The Japanese Yen has shed more than 20 percent of its value against the dollar. While the Won, which is the South Korean currency has increased in value by almost 9 per cent against the USD and over 20 percent against the Japanese Yen during that period.

Stocks
The Nikkei 225 in Japan which had made record gains in yesterday’s session, reversed some of those gains to be 0.59 per cent lower. The Kospi Index in South Korea rose 1.18 per cent following the lowering of its benchmark rate. In China, the Shanghai Composite lost 0.86 percent following consumer price data increases of 2.4 percent for last month, and falling producer prices by 2.6 per cent.

While the Australian rate was also cut and the data release showing an addition of 50,100 jobs which flew past expectations by almost 5 times the Australian S&P/ASX 200 was slightly down by 0.03 per cent.

In Europe, the stocks stayed high in a low volume session yesterday boosted by German production data and the potential announcement of a further rate cut. Tin the afternoon EURO STOXX 50 climbed 0.43 per cent, the French CAC 40 was up 074 per cent and the German DAX 30 was up 0.65 per cent.

In the U.S., prices closed higher on back of earnings reports and German data. The Dow Jones closed up 0.32 per cent at 15,105.12, the S&P 500 gained 0.41 per cent to end at 1.632.68, and the Nasdaq gained 0.49 per cent.

Forex
In a quiet session for the currencies, the USD continued its rough ride as it declined against most other majors. It was down against the AUD by 0.68 per cent, and the YEN by 0.29 percent. Meanwhile, the EUR gained against the USD by 0.03 percent, and the GBP rose 0.04 percent against the USD.

Commodities
The price of natural gas continues to fall as weather warms up, dropping 1.13 percent in the Asian session. The price of crude oil stayed down after release of U.S. supply data. Precious metals were mixed, with gold dropping 0.19 per cent and silver up 0.46 per cent.

What to watch today
Watch out for the British pound this morning as industrial and manufacturing figures will come out. It’s expected that the benchmark interest rate in the U.K. will stay the same. In the afternoon, keep an eye out for jobless claims in the U.S.