US Fed Chair Janet Yellen says the case for increasing rates has ‘strengthened 'in recent months'
Janet Yellen suggested increasing rates further while speaking to the Commonwealth Club of California in San Francisco Reuters

While most Asian stock market indices gained on Thursday (19 January), the Shanghai Composite was down 0.06% at 3,111.20 as of 4.59am GMT following an uptick in the US dollar after comments from Janet Yellen.

Overnight, the chairwoman of the US Federal Reserve hinted at increasing interest rates further. Speaking to the Commonwealth Club of California in San Francisco, she said it "makes sense" for the US central bank to raise rates gradually as holding them off for a long period could "risk a nasty surprise down the road".

Meanwhile, the Fed has released its latest Beige Book, a report which has anecdotal information on current economic conditions and is published eight times a year. The report showed that an improvement in manufacturing, labour shortages and improving business investment had set the stage for the December rate increase.

While these along with positive US data led to an uptick in the greenback, analysts said the currency could decline if Donald Trump makes any negative comments on the dollar during his inauguration as US president on Friday.

"Unless Donald Trump attacks the dollar again on Friday, we have seen the end to a month of losses in the greenback," Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, was quoted as saying by CNBC.

Mitsuo Imaizumi, chief currency strategist at Daiwa Securities in Tokyo, agreed. He was quoted by Reuters as saying: "The dollar clearly rose on Yellen's remarks..But with tomorrow's inauguration of Trump ahead, Japanese investors still might take a cautious stance today."

Indices in the region were trading as follows at 5.14am GMT:

CountryIndexPriceUp/Down%Change
Hong KongHang Seng Index22,943.96Down0.67%
JapanNikkei 22519,077.07Up0.97%
South KoreaKOSPI2,073.15Up0.13%
IndiaBSE27,284.65Up0.10%
AustraliaS&P/ASX 2005,692.20Up0.24%

On 18 January, the FTSE 100 Index closed 0.38% higher at 7,247.61, while the S&P 500 index closed 0.18% higher at 2,271.89.

Among commodities, oil prices were in the green. As of 12.06am EST, WTI crude oil was trading 0.78% higher at $51.48 (£41.93) a barrel, while Brent crude was trading 0.83% higher at $54.37 a barrel.