A cyclist passes the Federal Reserve building in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/File Photo ACKNOWLEDGE RIGHTS
Sept 14 (Reuters) – A look at the day ahead in Asian markets from financial markets columnist Jamie McGeever.
Asian markets are poised for a positive open on Thursday after investors interpreted the latest U.S. inflation reading as confirmation that the Federal Reserve will not raise interest rates next week and could extend its pause further.
But even as oil and Treasury yields edged lower, Wall Street’s momentum faltered at Wednesday’s close, leaving investors wondering whether the outlook for U.S. policy had become much clearer at all.
The answer is probably not.
However, the global policy picture could be much clearer on Thursday when the European Central Bank announces its latest interest rate decision.
Markets are pegging a 65% chance of a quarter-point rate hike, increasing their hawkish bets after a Reuters report said the central bank expects euro zone inflation to stay above 3% next year.
The Asia Pacific economic data calendar has some high-profile releases scheduled for Thursday, including Australian unemployment, Japanese machinery orders, Indian wholesale inflation and Indian trade.
India’s annual wholesale inflation is expected to be negative for the fifth consecutive month, but continues to move further away from July’s 4% deflation. Australia’s unemployment rate is expected to remain stable at 3.7%.
There seems to be a small divergence underway in the foreign exchange markets between the Japanese yen and the Chinese yuan. The yen has given back most of its gains from the Bank of Japan’s hawkish comments over the weekend and is back in “intervention warning” territory, while the yuan posted its strongest close in over a week on Wednesday.
The central bank remained in China, saying it would adopt the appropriate monetary policy stance to boost demand and prices in the economy, and investors would also keep an eye on divisions between the US and China, the most recent manifestation of which was the dispute over iPhones be.
The White House said Wednesday it was watching with “concern” apparent bans on the use of Apple iPhones by some Chinese government officials, adding that it appeared to be an aggressive and inappropriate retaliation.
Beijing, for its part, insists that there is no ban on the purchase and use of foreign phone brands.
But China could open another front in its trade and diplomatic wars after the European Commission opened an investigation on Wednesday into whether to impose punitive tariffs to protect EU manufacturers from cheaper Chinese electric vehicle imports that it says benefit from government subsidies benefit.
Here are key developments that could give markets more direction on Thursday:
– Unemployment in Australia (August)
– Wholesale price inflation in India (August)
– Japanese machine orders (July)
By Jamie McGeever; Editing by Josie Kao
Our standards: The Thomson Reuters Trust Principles.
The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and bias in accordance with the Trust Principles.
Comments are closed.