By dallying over raising interest rates the U.S. Federal Reserve made it easier this week for central banks in the Asia Pacific to stay dovish, with Indonesia lowering rates on Thursday and Australia and New Zealand saying they could cut later.
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USA equities rallied after the decision, with the three major indexes closing about 1 percent higher.
In a statement following a two-day policy meeting, the Fed said it could tighten monetary policy by year-end if the labour market had improved further.
The US dollar decreased against other major currencies as investors were digesting the latest Federal Reserve statement. A declining dollar and a third consecutive drawdown in USA crude inventories helped boost the oil market, ahead of a meeting of major oil producers.
The probability of a rate hike by the end of the year has risen from around 50 per cent after the Fed’s last meeting to around 65 per cent, he said.
The yen stepped back to 100.78 to the dollar from four-week high of 100.10 touched yesterday after Japan’s top currency diplomat warned Tokyo will take action if needed.
In the statement released on Wednesday after Fed’s two-day policy meeting, the USA central bank chose to keep its federal funds rate unchanged amid recent weak economic data and tepid inflation, Xinhua news agency reported.
Leading indicators and existing home sales data for August are both due at 10 a.m.
The Federal Open Market Committee will publish its Summary of Economic Projections alongside its decision on interest rates, followed by a press conference from the Fed Chair Janet Yellen at 2:30 pm ET.
Better-than-expected jobless claims (http://www.marketwatch.com/story/jobless-claims-fall-to-lowest-level-since-july-2016-09-22), which fell to the lowest tally since July, signaling a strong labor market helped extend optimism on Wall Street.
The Australian dollar has gained nearly one US cent after the US Federal Reserve decided against raising interest rates, while the new head of the Reserve Bank of Australia indicated there is little chance it will cut rates in the short term.
The major European markets also moved to the upside on the day.
ENERGIZED: Energy companies rose, following oil prices.
The 10-year Japanese government bond yield fell 3.5 basis points to minus 0.060 per cent in early today trade.
The relief rally was immediate and led the Nasdaq Composite to climb to a new record high.
Gold stocks jumped 6.1 per cent after gold prices rose to 1-1/2-week highs on Wednesday. Global bond yields also moved higher and there was a significant response in gold, which dipped to lows just below the $1,310 level.
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The New Zealand dollar is up by 0.3% to 0.7317 against U.S. dollar after the country’s reserve bank held its key rate at 2.00%, as expected.
