Asian Markets Mixed as Central Banks in Focus

This morning, Asian markets were mixed as traders are on the sidelines waiting on key monetary policy decisions, due on Wednesday from the Federal Reserve (Fed) and Bank of Japan (BOJ). The monetary policy decision from the Reserve Bank of New Zealand is also due.

Stocks and financial markets were closed yesterday for a public holiday. The Nikkei 225 reopened today to trade marginally higher. The index had been lower by 0.4 percent earlier in the day. The Topix, in Tokyo, was also higher on the day. In Korea, the Kospi Composite Index was modestly higher.

In Australia, the S&P ASX 200 was a bit lower with most sectors in the red after RBA (Resrve Bank of Australia) meeting signaled a neutral stand. The energy sector was down over one percent and the heavily weighted financial sub-index was also lower on the day. Yesterday, the ASX was closed thanks to technical glitches. The opening was delayed and then trading was halted in the afternoon.

In Hong Kong, the Hang Sang was a bit lower and the sock markets in China were virtually flat for today.

Asian Traders are Eyeing Central Bank Decisions

Markets in the Asian and Pacific Rim were rather muted as traders are waiting on monetary policy announcements from the Fed and the BOJ. Both are due on Wednesday. The RBNZ will also be announcing this week. This caused the trading ranges to be rather narrow this morning.

Markets have seemed to reach a point that there is an agreement between risk and reward. This means markets, in all financial arenas, should remain rather muted and quiet until both those main central banks announce tomorrow.

As far as the local currencies are concerned, the USD/JPY is treading water. Both the Australian Dollar and the Kiwi Dollar have held above key trend line supports for now. The US Dollar has also settled down as traders are content to wait until tomorrow. The US Federal Reserve Bank through its Federal Open Market Committee (FOMC) is likely to keep rates on hold this month. A string of recent economic data has come in weaker than expected. The policy decision is not as important as the after policy announcement. Should the remarks be more dovish than expected, the US Dollar and its relevant Forex markets could fall lower, as the Dollar will lose strength.

With that said, the yen will be very dependent on what the Bank of Japan does. Nobody is expecting the Japanese central bank to pull the trigger on any new policy, however, their inactions in the past has eroded confidence in their effectiveness, causing the yen to strengthen.