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Asian Stocks Stuck Pre-Fed, NZD Gains On Election Polling

Asian Stocks Stuck Pre-Fed, NZD Gains On Election Polling

David Cottle, Analyst


Talking Points:

  • Asian stocks barely moved as the US Federal Reserve’s policy decision will come early Thursday morning for local markets
  • The New Zealand Dollar got a lift from polling which showed a lead for the incumbent National Party
  • Japanese exports racked up another blockbuster month in August

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There was predictably little action in Asia Pacific stock markets Wednesday as investors refrained from heroics until they had heard from the US Federal Reserve.

The US central bank will make its September monetary policy decision later, which will be early Thursday morning for East Asia, Australia and New Zealand. It is not expected to alter its interest rate settings, although it is heavily forecast to leave a December increase very much in play. It is also expected to announce how the presumably very gradual unwinding of its vast, $4.5 trillion balance sheet will be structured in the months and years ahead.

The Nikkei 225 ended up just 0.05%, with the rest of the region's stocks mixed. The ASX 200 was down 0.1%, with the Shanghai Composite the standout, but even that was up just 0.3%

Risk appetite in the region was restrained a little by a confrontational speech at the United Nations from President Donald Trump. He mocked North Korean leader Jim Jong Un and warned that the US could “destroy” the rogue state should it make good on any of its threats.

Still, waiting for the Fed was undeniably the markets’ main preoccupation. There was little action in the foreign exchange markets with the US Dollar creeping incrementally lower against its major trader rivals. The Japanese Yen actually slipped on news of very strong August exports in its home country, presumably because it pointed to robust global demand. However, the New Zealand Dollar got a lift from domestic polling which put the incumbent National Party ahead in the electoral race, after weeks of more narrow results. The country will vote on Saturday.

Gold prices were torpid through the session although crude oil prices rose a little as investors mulled commentary out Iraq suggesting that traditional producer nations could extend their production reductions.

Apart from that crucial Fed decision, Wednesday offers official UK retail sales numbers, US existing home sales and mortgage application data along with US crude oil inventory data from key node Cushing, Oklahoma.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.