Asian shares extend declines amid USD surge as Fed poured cold water on bears

• The Fed’s not-so-dovish rate cut pushed traders to the USD.
• Weak manufacturing activity in China, political news surrounding Iran and North Korea kept traders off Asian equities.

The US Federal Reserve’s dovish rate cut has its negative impact over the Asian stocks as the greenback remains strong after the central bank turned down expectations of a longer easing cycle despite slashing the Fed rate for the first time since 2008 crisis.

The US Dollar (USD) ignored the US President Donald Trump’s criticism of the Federal Reserve’s monetary policy while early-day political news surrounding Iran and North Korea pushed traders towards seeking solace in the US currency.

With this, MSCI’s index of Asia-Pacific shares  ex-Japan drops for the fifth consecutive day towards mid-June low while marking a 0.6% loss ahead of the European session on Thursday. Japan’s NIKKEI remains mostly flat amid increasing expectations of further monetary easing by the Bank of Japan (BOJ) after the Deputy Governor Amamiya’s comments.

Further, China’s HANG SENG, Australia’s ASX 200 and New Zealand’s NZX50 remain on the negative side after Chinese Caixin manufacturing activity gauge followed the official announcement and slipped in the contraction region for the second month.

The global risk barometer, 10-year treasury yield of the US, gains 1.5 basis points (bps) top 2.037% by the press time.

While Bank of England’s (BOE) quarterly inflation report (QIR) will be in the spotlight during the day, second-tier data from the US and the EU could offer intermediate trade opportunities.