Asian shares fell on Thursday while the dollar reached multi-month highs against peers, after minutes from the U.S. central bank's last meeting showed the increasing prospect of reduced monetary stimulus this year.
Carlos Casanova, senior Asia economist at UBP, said the main drivers for markets this week were weaker economic activity data in China, which had prompted many economists to downgrade forecasts, the situation in Afghanistan and the Fed minutes.
However, officials noted the spread of the COVID-19 Delta variant could temporarily delay the full reopening of the economy and restrain a jobs market that looms large in the Fed's thinking."The minutes show a Fed that is pretty split on most things, but recognises that we are getting much closer to the point of tapering," wrote ING analysts in a note.
"We will have more visibility about the outlook for the U.S. 10-year yields from September onwards, there are some upside risks that they could go to 1.6% to 1.8% from the current levels, and for Asia Pacific that means outflows," said Casanova.
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