The Asian markets are likely to experience mixed trading, as traders engage in profit-taking following the Federal Reserve’s dovish shift and cautious policy measures from the Bank of England and the European Central Bank. Technical factors are also influencing equities, particularly as significant quarterly futures rollovers and options expirations loom later today. These trading activities are expected to predominantly drive short-term market movements.
On the macroeconomic front, attention should be paid to the US Dollar’s trends against G10 and emerging market currencies, as this could influence regional dynamics in Asia. The Yuan has shown a positive trajectory amidst the weakening US Dollar, with the Dollar Index dropping to its lowest point since August. Important data releases set for Friday include China’s activity figures. Should these data points show weakening and US interest rates continue to decline, Chinese authorities might initiate measures to bolster the economy. In the US, the focus will be on PMI data, the expiry of options and futures, and significant commentary from the Federal Reserve as the blackout period concludes. Market participants will be keen to discern further dovish signals to accurately adjust rate expectations for 2024.
