Ahead of the Fed, Asian equities falter, with the weak yen in focus

 Ahead of the Fed, Asian equities falter, with the weak yen in focus

With three consecutive months of losses, MSCI's broadest index of Asia-Pacific equities outside of Japan began November on a somber note, down 0.13%. Japan's Nikkei increased by 2%.

Ahead of the Fed, Asian equities falter, with the weak yen in focus.

Ahead of the Federal Reserve's highly anticipated policy announcement later in the day, Asian equities edged down on Wednesday. Meanwhile, the yen remained close to its one-year low versus the dollar, raising concerns about potential Tokyo intervention.

With three consecutive months of losses, MSCI's broadest index of Asia-Pacific equities outside of Japan began November on a somber note, down 0.13%. Japan's Nikkei increased by 2%.

Hong Kong's Hang Seng Index dropped 0.75%, while China shares slipped 0.15%.

A private survey released on Wednesday revealed that industrial activity in China unexpectedly fell in October. This finding confirmed the negative findings of the official manufacturing survey released the day before and raised concerns about the country's precarious economic recovery at the beginning of the fourth quarter.

However, with the Bank of Japan's move to further relax its hold on long-term interest rates by tweaking its bond yield control policy on Tuesday, the yen was the center of attention for Asian markets.

As a result of the decision, the yen fell sharply on Tuesday, hitting a 15-year low vs the euro and a one-year low against the dollar. Investors had been expecting the BOJ to take a more significant step toward unwinding years of huge monetary support.

The modification to a flexible regime has been seen by the market as a dovish move, according to Pepperstone's director of research Chris Weston.

"Once again competitors have been left frustrated by the lack of urgency that was demonstrated by the BOJ, and either hedged their yen longs or flipped into blatant yen shorts."

Masato Kanda, Japan's top currency diplomat, issued a stern warning after the dramatic decline in the value of the yen, stating that authorities were prepared to react to any "one-sided, sharp" changes in the currency.

After the remarks, the yen gained 0.27% to 151.26 per dollar, although it was still around its Tuesday low of 151.74, which it had reached a year earlier.

The market will probably test levels above the 150 zone again now that it has been surpassed and there has been no government reaction, according to ING experts.

"The next critical level might have been 152 in the short-term, but could go higher that depending on U.S. outcomes for data and FOMC decisions."

FED SUMMITS

Wall Street's main indexes closed higher overnight as traders anticipated the Fed's policy announcement later in the day, when it is anticipated that the central bank will leave interest rates unchanged.

In order to predict the direction of interest rates and the length of time they will remain high, traders will closely monitor the remarks made by Fed Chair Jerome Powell after the policy meeting.

The Federal Reserve will not contemplate raising interest rates again until the labor market has significantly cooled and inflationary pressures have subsided, according to Erik Weisman, chief economist and portfolio manager at MFS Investment Management.

"Chairman Powell will also make the case that the lagged effects of past adjustments have not fully impacted the economy indicating that patience is prudent."

Treasury rates continued to rise, with the yield on 10-year notes rising to 4.929%, an increase of 5.4 basis points. The yield on a 30-year Treasury bond increased to 5.090%, an increase of 6.6 basis points. [US] /

In relation to a currency basket, the dollar had a 0.056% increase to 106.73. At $1.2136, sterling was down 0.13% for the day.

Ahead of the Fed announcement, oil prices gradually increased as investors closely monitored the most recent events in the Israel-Hamas conflict.

U.S. crude increased by 0.28% to $81.25 a barrel, while Brent saw a daily increase of 0.35% to $85.32. (O/R)

Spot gold fell by 0.2% to $1,978.99 an ounce, staying below the $2,000 mark that it crossed last month as a result of a robust rise in safe assets.