Asia markets, dollar rally on Yellen rate hike hint

The dollar extended gains and most Asian markets resumed their rally on Wednesday as traders cheered upbeat remarks on the US economy by Federal Reserve boss Janet Yellen.

Wall Street hit record highs for a fourth successive day as Yellen reinforced the view that the world's top economy was in rude health, with the jobs market improving and inflation heading to the Fed's two percent target.

She confirmed the next rate rise could come at any time, which leaves open the possibility of a move at the Fed's March 14-15 policy meeting.

Her remarks, in the first of two days of testimony to Congress, helped drag US markets out of a morning slumber and reinvigorated the greenback against most of its peers.

“The US dollar was on the back foot during the Asian trade (Tuesday), but it got that boost from Yellen, so it will be on a stronger position (Wednesday),” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.

“She said rates need to rise. That’s important because to wait is to risk having to overreact and then knock the economy – and markets – for six.”

In Tokyo the dollar was at 114.35 yen from 114.27 yen in New York and well up from the 113.40 yen earlier in Asia. The pound and euro were  sharply down from their levels in Asia Tuesday.

Higher-risk currencies retreated, with Australia's dollar, the South Korean won, Malaysian ringgit and New Zealand dollar all well down.

- 'Trump rally continues' -

Equity markets tracked the US surge. Tokyo shot up one percent as the weaker yen helped exporters, while Hong Kong added 1.2 percent.

Sydney ended up 0.9 percent, Seoul gained 0.5 percent and Singapore was up 0.4 percent. Wellington and Taipei also advanced. However, Shanghai gave up earlier strength to close 0.2 percent lower.

The broad advance extends a rally that began last week when President Donald Trump promised details of "phenomenal" tax reforms, raising hopes he will also honour other election promises of massive infrastructure spending and deregulation.

"In principle, the Trump rally continues," said Toshihiko Matsuno, chief strategist at SMBC Friend Securities. 

"Yellen seemed so positive" towards hiking interest rates, he told AFP.

In Tokyo, however, troubled conglomerate Toshiba plunged almost nine percent -- extending Tuesday's eight percent decline -- after warning it faced a 390 billion yen loss in the fiscal year to March, hit by a 700 billion yen writedown at its US nuclear unit Westinghouse.

The news prompted its chairman to resign while it also hinted at another accounting scandal following a profit-padding crisis in 2015.

In early European trade London rose 0.4 percent, Frankfurt added 0.5 percent and Paris gained 0.3 percent.

- Key figures around 0800 GMT - 

Tokyo - Nikkei 225: UP 1.0 percent at 19,437.98 (close)

Hong Kong - Hang Seng: UP 1.2 percent at 23,994.87 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,212.99 (close)

London - FTSE 100: UP 0.4 percent at 7,297.90

Euro/dollar: UP at $1.0581 from $1.0576 

Pound/dollar: DOWN at $1.2462 from $1.2466

Dollar/yen: UP at 114.35 yen from 114.27 yen

Oil - West Texas Intermediate: DOWN 35 cents at $52.85 per barrel

Oil - Brent North Sea: DOWN 29 cents at $55.68 per barrel

New York - Dow: UP 0.5 percent at 20,504.41 (close)