The dollar index rose 0.15 percent.DXY to 95.995, hovering just below the 96.108 mark touched on Friday that was the highest since September 1. The Nasdaq composite climbed 6 points, or 0.1 percent, to 5,241. The Bank of Japan (BoJ) MPM (Wednesday) is be the main focus of this week and we expect BoJ to refrain from the further easing this time, but the BoJ could take a more flexible stance on the time horizon for reaching its price stability target of 2% and change the annual pace of increase in its JGB holdings to JPY70-90trn from the current JPY80trn.
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The central bank surprised markets in July by announcing a “comprehensive” review of its monetary policy measures.
Since investors doubt the Federal Reserve will raise interest rates Wednesday, they may focus instead on the Fed’s statement and a press conference led by Fed Chair Janet Yellen. The Standard & Poor’s 500 index added 4 points, or 0.2 percent, to 2,143.
Sterling fell 0.5 per cent to US$1.2955, a five-week low, on worries about the political and economic risks of Britain’s pending exit from the European Union.
The Bank of Japan is expected to ease its ultra-loose policies further, according to a Reuters poll of economists.
In bond markets, U.S. Treasury yields spiked higher immediately after the decision, as investors apparently seem to believe the BOJ’s move to steepen the yield curve will have a ripple effect on other bond markets.
US stocks are edging higher Tuesday with health care and household goods companies leading the way.
In the USA, the Federal Open Market Committee’s decision on central bank borrowing rates would likely be less influential as the Fed has postponed what it previously predicted to be almost four rate hikes in 2016.
“There is no realistic chance of a rate hike priced into the market at the moment, so if the Fed hikes interest rates this evening we would definitely see a sell-off in commodities and the emerging markets, including gold”, said Jeffrey Halley, senior market analyst at Oanda.
Merck rose 1 percent, the second-biggest gain in the Dow Jones industrial average.
The announcement helped shares soar – with the Nikkei nearly 2% up by the close – and the yen plunge at the expense of the dollar, as investors looked towards the U.S. ahead of the Fed’s policy announcement due later on Wednesday. PulteGroup gave up 58 cents, or 2.9 percent, to $19.29 and Lennar, which reported strong quarterly results, shed $1.59, or 3.5 percent, to $43.50.
The extra yield investors demand to own 30-year rather than five-year securities dropped for a third straight day, to about 1.23 percentage points.
The MSCI Asia Pacific Index gained less than 0.1 per cent to 138.72 as of 9:02 am in Tokyo. Tokyo’s benchmark Nikkei 225 closed down 0.2% and South Korea’s Kospi advanced 0.5%. While the French CAC 40 Index edged down by 0.1 percent, the German DAX Index inched up by 0.2 percent and the U.K.’s FTSE 100 Index rose by 0.3 percent. Brent crude, used to price worldwide oils, advanced 66 cents to $46.54 a barrel in London.
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ENERGY: Benchmark U.S. crude rose 43 cents, or 1 percent, to $43.73 a barrel in NY.
