It was a quiet start to Asian trading on Tuesday with little economic data to excite the markets apart from New Zealand trade numbers. New Zealand’s trade deficit widened to NZ$1.2 billion in September as exports fell from August but imports rose by more than expected. The New Zealand dollar briefly plunged to 0.6739 against the US dollar after the data but quickly bounced back to around 0.6777.
Asian equities were mostly in negative territory in today’s Asian trading as traders turn cautious ahead of central bank meetings by the US Federal Reserve, the Reserve Bank of New Zealand and the Bank of Japan later this week. Reports that the US sent a warship into the South China Sea on Tuesday added to the risk-off mood. But China’s main indices reversed earlier losses of more than 2% to stand 0.1% higher in late Asian session.
The Fed will begin its two-day monetary policy meeting today and while no move is expected tomorrow, investors will be looking to see if the FOMC statement will signal a rate hike at its December meeting. Meanwhile, expectations that the Bank of Japan would surprise markets with additional stimulus on Friday have been dampened after comments by a government advisor. Koichi Hamada, an advisor to Japan’s prime minister, was reported as saying on Monday that the Bank of Japan can wait before easing monetary policy further because of the tight labor market in Japan.
The dollar fell against the yen on Tuesday as yesterday’s poor new home sales figures added pressure to the greenback. The US currency was down at 120.47 yen in late Asian trading, having peaked at 121.07 yen earlier in the session. The euro moved higher against the dollar and the pound at 1.1056 dollars and 0.7204 pounds but was lower against the yen at 133.20 yen.
The pound was mostly flat against the dollar as markets await third quarter GDP data for the UK. The UK economy is expected to have slowed to between 0.5%-0.6% in the third quarter and a lower figure would raise concerns about the impact of the slowdown in emerging market economies on UK industry. Sterling was slightly weaker at 1.5345 dollars in late Asian trading.
Crude oil prices extended their decline as unseasonably mild weather added to the oversupply worries. US oil futures were over 1% lower at $43.50 in late Asian trading.
Coming up later today, UK GDP will be the main data in European trading while over in the US, durable goods orders, October services PMI and consumer confidence figures should keep investors on edge before tomorrow’s FOMC decision.