published Feb 28th 2017, 8:43 pm, by Adam Haigh and Livia Yap

(Bloomberg) —
The dollar pared gains with U.S. stock futures as investors searched for new details of Donald Trump’s economic strategy during his speech to Congress.

The Bloomberg Dollar Spot Index pulled back from a 0.4 percent gain, while contracts on the S&P 500 Index trimmed a similar advance. The yield on 10-year Treasuries was up one basis point, also paring a bigger gain.

“Markets are taking the speech in stride,” Sean Simko, who manages $8 billion in fixed-income assets at SEI Investments Co. in Oaks, Pennsylvania. “There are high expectations for this speech and may be setting up for disappointment.”

Trump’s commitment to spur growth by boosting spending and easing regulation helped fuel a stock rally after his election that reverberated around the world, sending the value of global equities above $70 trillion and propelling the dollar higher. The question facing investors hinges on whether Trump can deliver enough of a plan to appease the optimists amid signs investors’ patience is waning. In the days leading up to the speech, investors showed an unwillingness to add to riskier bets with stocks near all-time highs.

Traders sifted through a parade of other news on Wednesday morning in Asia before the U.S. president’s address. China’s official factory gauge firmed in February as producer prices rebound. The yen weakened on increased prospects for a U.S. interest-rate increase in March, giving support to Japanese equities. The Australian dollar erased an early decline as the nation’s economy grew faster than expected.

The odds of an increase in March for U.S. interest rates rose above 70 percent at one point, pushing up the dollar and dragging shorter-maturity Treasuries lower. Federal Reserve Bank of New York President William Dudley said the case for tightening has become a lot more compelling. Fed Bank of San Francisco President John Williams said he expects a rate increase to receive “serious consideration” at this month’s meeting. Fed Chair Janet Yellen speaks on Friday.

Here are the main moves in markets:

Currencies

The Bloomberg Dollar Spot Index rose 0.2 percent as of 11:40 a.m. in Tokyo, paring an earlier advance of 0.4 percent. The yen slid 0.2 percent to 113.03 per dollar, for a third day of losses. The Aussie dollar rose 0.4 percent, reversing an earlier decline of 0.3 percent. The country’s gross domestic product expanded 1.1 percent in the fourth quarter, higher than estimates for 0.8 percent growth, as households saved less and spent more.

Stocks

Japan’s Topix index increased 0.4 percent, paring an early rally of as much as 1.1 percent. The gauge completed a fifth straight monthly advance in February, the longest winning streak since early 2015. Australia’s S&P/ASX 200 index lost 0.3 percent. Hong Kong’s Hang Seng climbed 0.3 percent and the Shanghai Composite Index added 0.4 percent. China’s manufacturing data gives top officials gathering in Beijing a solid economic backdrop as they seek to rein in financial risks. Futures on the S&P 500 Index rose 0.3 percent, after the benchmark index finished February with its best monthly gain since March, climbing 3.7 percent. The Dow Jones Industrial Average broke its winning streak, falling for the first time in 13 days. The Stoxx Europe 600 Index added 0.2 percent after four straight days of losses.

Bonds

Yields on 10-year Treasuries rose one basis point to 2.40 percent, climbing for a third straight day. Two-year yields rose two basis points, after jumping seven basis points on Tuesday. Australian benchmark yields climbed seven basis points to 2.79 percent.

Commodities

Gold dropped for a third day, falling 0.1 percent to $1,247.32 an ounce after completing a 3.1 percent gain in February. Oil rose 0.2 percent to $54.11. Crude ended last month with a gain of 2.3 percent.
–With assistance from Toshiro Hasegawa.To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net ;Livia Yap in Singapore at lyap14@bloomberg.net To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net Jeff Sutherland

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