Asian shares dozed near recent highs in quiet trade on Monday as investors waited to see if the recent sell-off in longer-dated US Treasuries would extend, and maybe take some pressure off the beleaguered dollar. MSCI's broadest index of Asia-Pacific shares outside Japan was 0.02 percent lower at 562, but still eyeing the January top of 574.52.

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Japan's Nikkei dipped 0.4 percent after touchinga six-month peak on Friday, as the country suffered its biggest economic contraction on record in the second quarter. E-Mini futures for the S&P 500 firmed 0.25 percent in early trade to be just below its record close of 3,386.15.

The US second-quarter earnings season wraps up with the major retailers reporting this week, including Walmart Inc, Home Depot Inc and Kohls Corp. Politics will be a feature as the Democratic National Convention kicks off the 2020 presidential election season.

Sino-US relations remain a sticking point with US President Donald Trump on Saturday saying he could exert pressure on more Chinese companies such as technology giant Alibaba after he moved to ban TikTok.

US crude oil shipments to China will rise sharply in coming weeks, as the world's two top economies gear up to review their January deal after a prolonged trade war.

News that the scheduled review of the US-China Phase-One trade deal over the weekend had been postponed indefinitely didn’t elicit much of a reaction. The highlight of the economic calendar will be the release of the minutes from the Federal Reserve's last policy meeting.

"Market participants will be looking for insight into the details and exact timing of when the Fed's Monetary Policy Review will be completed, and also for more clarity with respect to the potential timing and structure of any changes to forward guidance," noted analysts at NatWest Markets.

Speculation is rife the Fed will adapt an average inflation target which would seek to push inflation above 2 percent for some time to make up for the years it has run below it.

That combined with massive new debt supply caused a sharp increase in longer-term bond yields last week with 30-year yields rising 21 basis points as the curve steepened.

The lift in yields gave the dollar some respite after weeks of losses. Against a basket of currencies the dollar was a fraction lower at 93.0-08, still uncomfortably close to the recent trough of 92.521. The euro flattened out a little late last week having met resistance around the two-year peak of USD 1.1915. Yet it still ended the week with a gain of 0.5 percent and was last trading at USD 1.1844.

"Investors strategically long EUR/USD should stick to the position," said CBA forex analyst Elias Haddad. "Greater Eurozone fiscal solidarity, real two?year swap rate differentials and relative central bank balance sheet trends between the Eurozone and the US suggest the fundamental uptrend in EUR/USD is intact." "EUR/USD is still undervalued relative to the value implied by price deflator differentials which pegs "fair value" at around USD 1.2300."

The single currency has also made a notable break higher on the yen to reach ground not trod since April 2019. Indeed, the yen fell against most of its peers last week, with the dollar holding at 106.59 yen on Monday.

In commodity markets, gold eased 0.4 percent to USD 1,935 an ounce, after the jump in bond yields saw it lose 4.5 percent last week in its worst performance since March.

Oil prices edged ahead after data showed crude oil, gasoline, and distillate inventories all declined in the week-ending August 7. Brent crude futures rose 33 cents to USD 45.13 a barrel, while US crude gained 39 cent to USD 42.40.

First Published:Aug 17, 2020 8:04 AM IST