Amid a lack of broad direction early Thursday for Asian equities markets, the dollar's decline was garnering investor attention ahead of the planned nomination of the next Federal Reserve chairman.
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With Fed governor Jerome Powell reported to be President Donald Trump's choice later Thursday, dollar bulls seemed to be using the moment as a good excuse to adjust long-dollar positions, said Masashi Murata, currency strategist at Brown Brothers Harriman.
Meanwhile, the Fed indicated it remains on course to raise rates once more this year. And the Bank of England is widely expected to tighten later Thursday, its first rate increase in a decade.
The Wall Street Journal Dollar Index was recently down 0.3%, reversing the gains seen the previous two days. The chatter that proposed tax cuts that were also set to be unveiled Thursday wouldn't be as extensive as expected was also hurting, said Sean Callow, a forex strategist at Westpac.
Meanwhile, there was a lack of broad movement in Asian equities.
Chinese stocks declined amid concern that rising interest rates globally could squeeze out easy money, leaving less-efficient and overleveraged Chinese firms in a quandary.
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Chinese policy makers want to direct credit toward infrastructure, innovation and job creation, said Wendy Liu, head of research for greater China at Nomura. "Continued efforts toward squeezing extra froth out of interbank flipping of financial products is akin to taking away the easy money and getting people to do real work," she added.
Stock indexes in Shanghai and Shenzhen were down about 0.5% at the midday break.
Higher interest rates between banks on the mainland helped lead to the yuan gaining against the dollar again on Thursday.
"If the U.S. economy grows stronger than expected, we can expect the Fed to move faster than what the market expects," said Hao Hong, head of research at Hong Kong's BOCOM International, referring to increasing interest rates.
He added that that could prompt some before-the-year-end profit-taking--in particular in Hong Kong stocks--on concerns of rising interest rates there as its dollar is loosely pegged to the U.S. unit. The Hang Seng has jumped 30% this year, making it one of the world's best performing indexes.
Most major Asian stock indexes were close to Wednesday's closing levels by midday after those in Japan, Australia and South Korea hit fresh 2017 highs in early trading.
"Stocks have run hard in the past few days, and investors seem to question whether further gains are justified," said Michael McCarthy, chief market strategist at CMC Markets.
But New Zealand's NZX 50 Index rebounded 0.4% after logging its biggest drop Wednesday in eight months despite the broad regional gains posted then.
Suryatapa Bhattacharya contributed to this article.
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(END) Dow Jones Newswires
November 02, 2017 00:36 ET (04:36 GMT)