Asian Stocks Trade Narrow, Mixed As Fed Powell's Testimony Looms
Asian Stocks Talking Points:
- Stock markets didn’t move far as the Fed Chair’s latest economic take was awaited
- The US Dollar made modest gains, suggesting he’s not expected to be too dovish
- Chinese consumer price inflation rose as expected in June
Find out what retail foreign exchange investors make of your favorite currency’s chances right now at the DailyFX Sentiment Page
Asia Pacific stocks put in a mixed but perhaps predictably subdued performance Wednesday ahead of attention-grabbing testimony to Congress from the Federal Reserve Chair.
Such occasions are always big for markets, of course, but Jerome Powell’s audience with the House Financial Services Committee comes at a fascinating juncture. Markets had been pretty sure that US interest rates were headed substantially lower. However last week’s surprisingly strong showing from the labor market has holed that thesis, if not completely sunk it.
There was mixed news on trade. On the upside, top US officials have spoken with their Chinese counterparts, so there’s some hope that stalled talks can be restarted properly. However, local news was less reassuring. Reuters reported that South Korea’s President had said that Japan’s export curbs on key materials used by technology firms in his country may be prolonged, and that government will boost spending to help reduce reliance on Japan.
On the data front, China’s consumer price inflation rose as expected, but factory gate prices weakened, ratcheting up the pain on manufacturers.
The Nikkei 225 was down just 0.04% in the middle of the Tokyo afternoon, with the Shanghai Composite of by even less. Shares in Hong Kong, Australia and South Korea were higher, with the Kospi leading on gains of 0.8%.
The US Dollar edged up and Treasury yields made gains, suggesting that the markets think Mr. Powell won’t be too dovish later. USD/JPY is flirting with an upside break of its current broad, daily chart range, and may top it comfortably if Wednesday’s testimony sees rate-cut bets pared even more.
Crude oil prices managed gains despite worries about global growth and demand, as the market responded to Tuesday’s news of a bigger-than-expected drawdown in US inventories.
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--- Written by David Cottle, DailyFX Research
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.