US dollar sentiment was strong, share markets were buoyant and Eurodollar interest rate futures were under pressure today on an upbeat mood over US economic prospects and opposition progress in the Afghan war.
The dollar ran into some profit-taking after earlier hitting three-month highs against the euro and two-week highs against the yen. But traders were still bullish on the perception a US economic recovery could be around the corner.
Front-month Eurodollar futures lost fresh ground in Asian trade as the market priced in higher US interest rates by next summer in a remarkable shift in sentiment. US Treasuries also came under fresh pressure in Asia.
"What you're seeing is a big change in sentiment. Before, the market was trying to figure out how much slower the Fed was going to ease. Now they're trying to figure out the pace of the Fed's tightening," said Mr Lee Boon Keng, currency strategist at DBS Bank in Singapore.
Tokyo shares rose for the third straight day as Asian stock markets were still in positive mood. They were helped by the renewed optimism over the US economy, so important for the region's exports, and a steady performance on Wall Street.
On top of Wednesday's record leap in US October retail sales, data issued yesterday showed weekly unemployment claims shrinking and manufacturing activity in the US mid-Atlantic region starting to stabilise.
A US Commerce Department report set for release later today, will probably show plummeting energy prices caused inflation to fall in October.
Economists polled by Reuterssee the consumer price index falling 0.2 per cent, compared with a 0.4 per cent rise in September.