* Dollar in driving seat as yield advantage steadily widens
* Nikkei strikes one-year high as Wall St makes records
* Asia shares ex-Japan trail behind as funds flow offshore
* Oil up for fourth session, gold restrained by dollar
By Wayne Cole
SYDNEY, Dec 21 The U.S. dollar held near 14-year
peaks on Wednesday as global yield spreads shifted inexorably in
its favour, while early weakness in the yen saw Japanese shares
touch a one-year top.
Profit-taking set in as a slow pre-Christmas session dragged
on and the Nikkei eased 0.2 percent in late trade.
Spread betters pointed to a small opening loss for European
exchanges after shares there hit an 11-month high on Tuesday.
Australia's main index finished at its best level in
17 months after Wall Street racked up more records.
The dollar has been revelling in its rapidly widening yield
premium, with the Federal Reserve set on a tightening course
even as its peers in Europe and Japan act to keep their
short-term rates deep in negative territory.
"It is now clear that the U.S. dollar does have more yield
fuel and we would not try to pick even an interim high," said
Sean Callow, a senior forex analyst at Westpac.
"Dollar strength should keep pressure on G10 and Asian FX
into the new year."
The dollar index, which measures it against a basket of
currencies, stood at 103.110 having reached 103.65, its
highest since December 2002.
The U.S. currency eased a touch on the yen to 117.64,
but remained in easy reach of the recent peak at 118.66. The
euro was a fraction firmer at $1.0409.
On Wall Street, the Dow had ended Tuesday just 25 points shy
of the magical 20,000 barrier helped by a 1.68 percent gain in
Stocks have been on a tear since the Nov. 8 presidential
election, with the Dow up 9 percent and the S&P 500 6 percent on
bets that President-elect Donald Trump's plans for deregulation
and infrastructure spending might boost profits and growth.
The Dow rose 0.46 percent on Tuesday, while the S&P
500 gained 0.36 percent and the Nasdaq 0.49
percent. Eight of the 11 major S&P sectors rose, led by a 1.23
percent jump in the financial index.
After the bell, Nike rose 3 percent on a strong
quarterly report from the sports apparel seller.
Emerging markets have not been nearly as thrilled by Trump's
win, as the threat of tariffs has stirred fears of a trade war
while rising U.S. yields have attracted funds away.
Benchmark 10-year U.S yields have climbed almost
80 basis points since early November to reach 2.57 percent.
Data from the Institute for International Finance showed
non-resident investors had pulled $23 billion from emerging
market portfolios since early October.
The outflows have triggered the longest continuous "reversal
alert" since the organization began issuing the notice in 2005.
Chinese markets have also been unsettled by Beijing's move
to heighten supervision of shadow banking activities and on talk
it may tighten liquidity to crimp the outflow of capital.
MSCI's broadest index of Asia-Pacific shares outside Japan
inched up 0.3 percent on Wednesday, but that
followed a string of losses.
In commodity markets, oil prices crept higher for a fourth
session on expectations data due later in the day would show a
U.S. crude inventory draw.
U.S. crude futures were up 19 cents at $53.49 a
barrel, while benchmark Brent crude futures added 15
cents to $55.50.
Gold held at $1,135.40 an ounce as a firm U.S. dollar
kept it near last week's 10-1/2-month low of $1,122.35.
(Editing by Shri Navaratnam and Eric Meijer)