Overnight

Asian shares softened Wednesday with the growing prospect of higher interest rates in the U.S., pushing the greenback up versus other currencies. A down Wall Street day added to the concern ahead of Friday's non-payroll jobs report.

The one exception was the Nikkei at 1661.80, up0.82% on the weaker yen, the MSCI broadest index of Asia-Pacific shares outside Japan,down 0.3%,the Australian ASX 200 off 1.1%, the Kospi lower 0.3% as the dollar rose overnight against the yen 1.1%., the MSCI index still is on track to wind up August with a modest gain close to 2%. Hong Kong's Hang Seng remained flat and the Shanghai Composite Index edged  up 0.1%.

As fears about capital flight continue perhaps much more interesting is the Japanese have been trying to stimulate their economy for seemingly a couple of blue moons and, as one writer recently noted, "Prime Minister Shinzo Abe introduced negative interest rates in January. This has driven down the yields on Japan government bonds to the point where 80 percent of them now offer a negative yield. This means that owning them is a guaranteed way to lose money.

"But Japan is a nation of savers. And one of their favourite ways to save is government bonds. Since buying these will now mean they lose money, more investors have turned to gold in recent months.
Despite the rise in demand, Japan’s absolute demand for gold is still quite small compared to that of other countries. Last quarter Japan’s absolute demand for gold (in tonnes) was only 5 percent of demand coming from China."



Gold prices edged higher in overnight trade in Asia as the yellow stuff seems caught between the rock of possible higher interest rates in the U.S. and the hard place of a weaker yen that for now troubles investors. Add to that global uncertainty and you have a recipe for some confusion.

Other concerns given Fed Vice Chair Stanley Fischer's comment Tuesday that the  job market was nearly at full strength and the future of interest rates depends how well the economy is doing. To many the danger here is the Fed's chasing of just a number. Sure consumer confidence hit an 11 month high in August, but there are still plenty of troubling signs about the economy around. One such is the little noticed import activity of ports. U.S. ports, according to the WSJ, geared up this summer for more business only to be left waiting at the docks as they are "..on pace to handle 2.2% more imports this year, the slowest rate of growth since2011."