Japan’s Nikkei share average gave up early gains and slipped on Thursday as the yen clawed back ground it had lost to the dollar.
The Nikkei slipped 0.4 percent by midday to 16,774.26, moving away from last Friday’s five-week highs.
“Resistance for the Nikkei lies around 17,000 today, and it is foreign exchange that largely determines whether or not it would be broken,” said Yutaka Miura, senior technical analyst at Mizuho Securities.
The dollar skidded 0.5 percent to 103.59 yen, moving away from its Wednesday high of 104.49 yen, which was its highest level since late July.
The greenback had gotten a lift overnight after minutes of the U.S. Federal Reserve’s September policy meeting showed several voting policy members believed a rate hike would be warranted “relatively soon” if the U.S. economy continued to strengthen.
“The minutes last night boosted sentiment for a sooner-rather-than-later rate hike in the states,” which lifted the dollar, said Gavin Parry, managing director at Parry International Trading in Hong Kong.
“So 17,000 has been very much a resistance level, and given the fact this morning that the yen had already broken down through the 104 handle, there just wasn’t that momentum.”
Domestic economic concerns also remained.
These were underscored by a report in the Sankei newspaper on Thursday that said the Bank of Japan was likely to cut its consumer inflation forecast for the 2017 fiscal year to the lower 1 percent zone, from its current 1.7 percent for the fiscal year starting in April, as a stronger yen, weak oil prices and sluggish consumer spending curb inflation.
Downbeat data from China was likely to weigh on sentiment in the afternoon session. China’s September exports fell 10 percent from a year earlier, more than markets had expected, while imports also fell 1.9 percent, official data showed on Thursday.
Shares of Toyota Motor Corp and Suzuki Motor Corp rose 0.2 percent and 2 percent, respectively, after the two automakers said on Wednesday that they plan to explore a possible partnership, citing technological challenges and the need to keep up with consolidation in the global auto industry.
Hoya Corp shares fell 1.9 percent after the Japanese optical device maker said on Wednesday that it will acquire Performance Optics of the U.S. for about $476 million.
The broader Topix was down 0.1 percent at midday at 1,340.48.
The JPX-Nikkei Index 400 slipped 0.2 percent to 11,993.87.