Asian shares up, dollar wobbly as US inflation data reinforces Fed pause bets

Asian shares rose and the dollar was under pressure on Wednesday after slowing U.S. inflation solidified bets that the Federal Reserve would skip a hike later in the day, but uncertainty remained about further rate increases beyond this week.

The much-watched U.S. CPI report overnight showed prices barely rose in May, with just a 0.1% increase from the prior month. On an annual basis, consumer prices rose 4%, the smallest in more than two years, slowing from April’s 4.9%.

That led traders to firm up expectations of a rate pause by the Fed to 91.9% when it concludes a two-day policy meeting on Wednesday, but the still-strong underlying price pressures suggest an over 60% probability the central bank could resume hikes in July, according to CME Group’s FedWatch Tool.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up 0.2% in early regional trade, after surging 1.1% in the prior session to the highest in two months.

Tokyo’s Nikkei (.N225) rose 1% to a fresh 33-year high, helped by expectations of extended ultra loose policy from the Bank of Japan.

This report’s information was first seen on REUTERS; to read more, click this link.