Asian equity is trading mixed with the region lacking direction after another volatile session in the US ahead of the Fed monetary policy decision. At the same time, a holiday closure in Australia also thins conditions with traders eyeing month-end trade.
On the geopolitical front, Russia and Ukraine tensions continue to get attention when any risk-off price action prints the screens. However, the Ruble price action doesn’t quite support that narrative as the Russian currency traded flat and other safe haven pairs far from outperforming. For Asian traders, the commodity sector could show some positive flows as the WTI closed up +2.25% near January 2020 at $87.1.
The main event will be the FOMC decisions for the session ahead, with most participants waiting for a hit at March fed funds rate lift-off and plans to start Quantitative Tightening, shrinking its balance sheet. The markets could move strongly with any hint from the FOMC, or Fed Chair Powell could signal a faster tightening that is already priced in. Global and especially US equities/Techs could go south, USD beat any low-beta and EMFX pairs and US front-end Treasury curve outperforming, pushing short-term premiums higher. On the other hand, a less hawk message with strong forward guidance regarding rates path/speed and balance sheet reduction could support global risk assets.
