Asian equities could trade mixed as US stocks closed positive as a late Nasdaq-led surge supported a reversal across all main indices and saw the S&P 500 rebound from a year-to-date low. Traders are watching the FX market volatility as the USD weighs heavily on cyclical currencies, safe have pairs. The volatility and the pace of the USD appreciation started to call Central Banks’ attention, like the ECB and the BoJ. The interest rate differentials play an important role in price action, and investors should keep monitoring the Bond market closely ahead of the FOMC on Wednesday. The US 10-year yield briefly rose further 3.0% for the first time since 2018.
On the macro front, China’s PMI data came below market expectations. It flared economic growth concerns as early signs of the economic impact of China’s Zero-COVID policy started to appear. For the session ahead, traders will be working on positioning ahead of the FOMC and watching the RBA Meeting, where a much firmer than expected Q122 Consumer Price Index print in Australia may have pitched the scales towards a rate hike. Liquidity might be an issue for larger positions and put some weight on price discovery as markets in China, Japan, Singapore, India, Indonesia and Malaysia are closed for holidays.
