Asian markets mostly rose Monday as traders gear up for central bank meetings in the United States and Japan this week, hoping authorities will press ahead with loose monetary policies.
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While U.S. officials are investigating the attacks as potential “acts of terrorism”, they stopped short of characterizing the motivation for any of them until more evidence is uncovered.
“With the expectation of no action in the USA until at least December, the major market moving news is likely to be from (BoJ) Governor Haruhiko Kuroda, with investors hoping for significant intervention and forward guidance, including a further cut to rates”.
Australia’s S&P/ASX 200 index edged down 0.04 percent at 5,294.80 points and South Korea’s KOSPI advanced 0.9 percent at 2,016.86 points.
Tokyo markets were shut Monday for a public holiday in Japan. Sterling trades 0.3 percent up at 1.3037, retreating from a 2-week low of 1.2994 struck last week.
The 10-year German Bund yield rose 1.5 basis points to 0.017 percent, having briefly dipped into negative territory earlier in the session. On the Nasdaq, 1,698 issues rose and 659 fell.
Yet most recent consumer and industrial activity data has disappointed, leaving the market still pricing in only a 12 percent 0#FF: probability of a rate rise this week, and 45 percent for December.
“In other words, a slower, more gradual pace of tightening”.
This indicates that the market seems to be questioning the effectiveness of monetary easing measures or even negative interest rates in stimulating economic growth.
While Wong said the strength of the dollar put it at a level where the Reserve Bank may look to intervene in the currency markets in a bid to weaken it, BNZ said the dollar may not be overvalued.
The Bank of Japan also meets on Wednesday and could well go in the opposite direction by easing policy, though conflicting reports on what it might do have stoked much uncertainty.
As the greenback lost ground, oil prices CLV6, +1.53% perked up and US stock futures pointed to a stronger start for Wall Street on Monday.
Any steps that markets consider to be less than aggressive would likely see the yen push higher and pressure the Nikkei .N225 . The dollar was last down 0.61 percent against the yen at 101.66 yen. The euro was flat at $1.1159.
Crude oil prices gained by more than 1 percent after Venezuela said OPEC and non-OPEC producers were finalizing an output stabilizing deal and as conflicts in Libya increased concerns that efforts to restart crude exports could be interrupted. Venezuelan President Nicolas Maduro said on Sunday that a deal between OPEC and non-OPEC countries to stabilize oil markets could be announced this month.
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“The market is resigned to the fact that the Fed won’t move in September”, said Matt Jones, head of USA equity strategy at J.P. Morgan Private Bank in NY.
