Shares closed down 0.90% yesterday.
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“It appears from various noise that the Fed is going to try to manufacture a pretty clear statement on what the market should expect after a few recent embarrassing forward guidance that failed to materialise from the summer’s market-disruptive events”, says Saxo Bank’s head of FX strategy John J Hardy.
The central bank hasn’t hiked rates in about a decade and markets see virtually no chance it will do so at the end of the two-day policy meeting.
The U.S. economy was among few bright spots in the world, so a slowdown could hurt export-dependent Asian countries.
The euro was last up slightly against the dollar at $1.1045, while the dollar was steady against the yen at ¥120.42.
Earlier, the ECB’s stimulus plan, the USA dollar turned flat against the euro. 3640 as investors considered the prospect of further monetary easing from the Bank of Japan at its meeting on Friday.
Focus fell on the Fed’s stance after the European Central Bank opened the door for more easing and China cut rates and reserve requirements.
It is against this backdrop that the Federal Reserve will be making its penultimate decision of 2015, with policymakers probably more divided about when to raise rates than at any other time in the past few years. Below that we have major support at the 1.0820 level and May and July lows.
The Dow Jones industrial average fell 41.62 points, or 0.24 per cent, to 17,581.43, the S&P 500 lost 5.29 points, or 0.26 per cent, to 2,065.89 and the Nasdaq Composite dropped 4.56 points, or 0.09 per cent, to 5,030.15. But they have enjoyed a recovery this month as talk of a delay has mounted.
In Japan, retail sales fell an unexpected 0.2% as retail fuel sales slumped, against a gain of 0.4% seen year-on-year for September for the first year-on-year drop in six months.
Meanwhile, Bank Indonesia’s benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.03 percent to IDR 13,630 per U.S. dollar on Wednesday (28/10).
Aerosun Corp, which makes parts for the aviation industry, surged 10%, as did Aerospace Communications Holdings Group.
“Military tension in the South China Sea is always a hot issue and the market is quite sensitive to the related news flow”, said Wei Wei, an analyst at Huaxi Securities Co.
“Defence stocks are good bets on the theme”.
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What might be missed by the headline reads is that the PBoC has abolished the deposit rate ceiling – this is a big step forward in liberalising the interest rate market and shows China is very much committed to its goals of liberating the financial system.
