Japan’s Nikkei spiked more than 1 percent on Tuesday to hit near two-year highs after U.S. hi-tech stocks rebounded on Monday and investors showed their confidence with stock purchases. MSCI’s broadest index of shares outside Japan also held near two-year highs but changed little on Tuesday.  Taiwan shares saw a 17-year high during Tuesday morning’s trading session.  

Wall Street’s Dow industrial average and S&P 500 index hit record highs on Monday, led by a correction in the technology sector and gains in the financial sector as U.S. debt yields rose following the comments by New York Federal Reserve President William Dudley. In his statement, Dudley said that U.S. inflation should rebound together with wages as the labor market improves. Dudley’s comments bolstered expectations that interest rates will continue to rise.

Currency Movements

Dudley’s comments also spurred the U.S. dollar to hit a three-week high against the yen on Tuesday. The dollar hit as high as 111.775 yen before retreating, a gain of 2.7 percent since hitting a two-month low less than a week ago, on June 14. The dollar is now near some critical technical resistance levels such as the intraday high of May 24, when it traded at 112.13 yen. This could create additional opportunities for gains if the level is breached.  Fundamentals also point to the dollar heading higher, especially after the BOJ’s comments last week which hinted that there was no rush to curb the country’s economic stimulus program.  

The euro was up slightly to $1.1158 while the British pound held firm at $1.2741 in advance of speeches by Bank of England Governor Mark Carney and British finance minister Philip Hammond later today.  

Spot gold rose slightly on Tuesday after hitting near five-week lows on Tuesday. Spot gold was up 0.2 percent to $1244.76 per ounce while U.S. gold futures were flat at $1,246.60 per ounce.