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Asian investors tread carefully ahead of Fed decision

by September 20, 2017 General

Foreign exchanges were seeing little movement before the US central bank's meeting ends. — Reuters picForeign exchanges were seeing little movement before the US central bank’s meeting ends. — Reuters picHONG KONG, Sept 20 — Asian markets moved tentatively today ahead of a Federal Reserve policy decision, while geopolitical issues returned after Donald Trump threatened to “totally destroy” North Korea if it threatened the US or its allies.

A third successive record on Wall Street, fanned by speculation about Trump’s economic agenda, was not enough to induce much buying in the region as dealers cashed in recent gains.

Foreign exchanges were also seeing little movement before the US central bank’s meeting ends, with the dollar essentially flat, although the Mexican peso was down after an earthquake killed more than 200 in that country.

Stephen Innes, head of Asia-Pacific trading at Oanda, said: “Markets have reached a crossroads and dealers are sitting tight ahead of (the Federal Open Market Committee meeting). It seems like a typical pre-FOMC week with low currency volatility.”

While policymakers are not expected to raise interest rates, the post-meeting statement and comments from chair Janet Yellen are the main focus as traders hope for a timetable on winding down its crisis-era bond-buying stimulus.

“The market doesn’t expect anything earth-shattering from the meeting but there are risks on both sides,” Greg McKenna, chief market strategist at AxiTrader, said in a commentary.

In equity trade, Tokyo ended 0.1 per cent higher after surging two per cent on Tuesday. Sydney and Singapore each shed 0.1 per cent, while Seoul was 0.2 per cent down.

However, Hong Kong ended up 0.3 per cent and Shanghai also closed 0.3 per cent higher.

In early European trade London rose 0.1 per cent while Paris and Frankfurt were flat.

The US-North Korea standoff was thrown back into focus by Trump on Tuesday when he warned Pyongyang over its nuclear programme in his maiden UN General Assembly speech.

The president said he would wipe out the North if it threatened the US or its allies and warned Kim Jong-Un was “on a suicide mission for himself and for his regime”.

“The United States is ready, willing and able, but hopefully this will not be necessary,” he said.

McKenna said “we all need to keep a weather eye on North Korea”, although he added that the tycoon was “much more conciliatory” towards the United Nations than he had been in the past. — AFP