FMG Fortescue Ltd

By Kenan Machado 

President Donald Trump's comments on the U.S. dollar sent the currency lower against its Asian counterparts, prompting a selloff in key regional equity markets early Thursday.

Australia's S&P/ASX 200 was down 0.8% with index heavyweights, some of which report in U.S. dollars, dragging the benchmark lower.

Among mining exporters, Fortescue Metals slumped as much as 8.1%, while Rio Tinto lost 4.4%. BHP Billiton fell 4%. The Australian dollar was last up 0.6% against its U.S. counterpart.

In Japan, the Nikkei Stock Average was down 1.1% after earlier reaching its lowest level since December, as the yen hit fresh five-month highs against the U.S. dollar.

The WSJ Dollar Index, which measures the dollar against 16 currencies, fell 0.5% during U.S. trading and was off another 0.1% in Asia.

The dollar began its slide overnight after Mr. Trump told The Wall Street Journal that the currency "is getting too strong" and he would prefer the Federal Reserve to keep interest rates low. "It's very, very hard to compete when you have a strong dollar and other countries are devaluing their currency," he said.

Mr. Trump also said he changed his mind on calling China a currency manipulator because he doesn't want to jeopardize talks with Beijing over confronting the North Korean threat.

"As soon as his comments hit the wires, including his comments favoring a low-interest rate and that China is not a currency manipulator, the U.S. dollar came under heavy pressure," said Greg McKenna, chief market strategist at AxiTrader.

Early Thursday, China's central bank set the yuan 0.4% stronger against the dollar, the biggest one-day increase since Jan. 18. The dollar was last down 0.2% against the yuan in onshore trading.

But analysts say that the interest rate differential between the U.S. and other countries could support the dollar. On Thursday, central banks in South Korea and Singapore both kept policy unchanged.

Meanwhile, overnight selling in U.S. banking shares extended into Asia. Citigroup, J.P. Morgan Chase and Wells Fargo will report first-quarter earnings Thursday. Australia's Macquarie Group fell 0.9% while Australia and New Zealand Banking Group lost 0.6%. Japan's Shinsei Bank was off 1.6% and Mitsubishi UFJ Financial fell 1.4%.

The rising uncertainty pushed up demand for gold, with prices hitting another five-month high Thursday. A weaker dollar makes gold cheaper to buy.

Write to Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

April 12, 2017 23:13 ET (03:13 GMT)

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