Tokyo - Asian stocks steadied on
Wednesday and the dollar held firm as investors awaited the
Federal Reserve's policy decision later in the day for more
clues on its tightening plans.
The Fed concludes a two-day meeting later on Wednesday, and
is widely expected to keep interest rates unchanged.
With a rate hike not in the picture this time, the focus
will be on the Fed's statement, with markets looking for signs
of when the central bank will begin paring its massive bond
holdings and next raise rates. A statement is expected at 1800
GMT.
"The stock markets are generally of a view that the Fed is
not in too much of a hurry to normalise monetary policy. So
equities would be able to take this Fed meeting in stride if the
Fed's statement is in line with such views," said Masahiro
Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
Federal funds futures implied traders saw the chance of a
Fed rate increase in September at about 8 percent and a December
hike possibility at 48 percent.
A more assertive policy message by the Fed, on the other
hand, was expected to lift U.S. yields and boost the dollar.
MSCI's broadest index of Asia-Pacific shares outside Japan
was little changed, but drew mild support after
the S&P 500 climbed to an all-time high overnight on
well-received results from McDonald's and Caterpillar
in addition to bank share gains.
Australian stocks gained 1 percent with a
smaller-than-expected rise in local inflation supporting views
that interest rates will remain at record lows for some time to
come. The Australian dollar slipped 0.3 percent to $0.7918
.
Japan's Nikkei added 0.5 percent after the dollar
rallied against the yen overnight to pull away from
seven-week lows.
Shanghai lost 0.2 percent while South Korea's KOSPI
slipped 0.3 percent.
The dollar regained some ground against major currencies in
the previous session after U.S. Treasury yields jumped the most
in almost five months in response to Wall Street's rise and on
reduced demand for safe-haven bonds.
But the greenback remained hobbled by uncertainty about the
progress of healthcare reforms and the prospect of further
delays for President Donald's Trump's ambitious stimulus and tax
reform polices.
U.S. Senate Republicans narrowly agreed on Tuesday to open
debate on a bill to end Democratic President Barack Obama's
signature healthcare law, but it still faces significant
hurdles.
The dollar has also been kept in check by political
uncertainty as lawmakers investigate possible meddling by Russia
in the 2016 presidential election and whether there was any
collusion by Trump's campaign.
The euro was effectively flat at $1.1651, pulling
back from a two-year high of $1.1712 hit on Tuesday on a
stronger-than-expected German Ifo business survey.
Expectations that the European Central Bank would begin
phasing out its easy monetary policy sooner rather than later
have supported the common currency this month.
The dollar index against a basket of major currencies was
little changed at 94.061, after managing to put some
distance between a 13-month low of 93.638 plumbed on Tuesday.
The dollar was steady at 111.915 yen after surging
about 0.7 percent overnight.
"The dollar continues to lack clear direction against the
yen. Uncertainty towards US politics is capping the pair. But
'risk on' is also taking place in equities thanks to good
corporate results, so dollar/yen is not headed for a big slide
either," said Daisaku Ueno, chief currency strategist at
Mitsubishi UFJ Morgan Stanley Securities.
In commodities, crude oil extended its surge after jumping
overnight on data showing a sharp fall in U.S. crude stocks last
week.
US crude rose 1 percent to $48.37 a barrel and
Brent added 0.8 percent to $50.61 a barrel.
Gold struggled as improved investor risk appetite curbed the
precious metal's appeal. Spot gold was a shade lower at
$1,248.26 an ounce following its ascent to a one-month peak of
$1,258.79 on Monday.