Asian equities and FX traded with little in the way of firm direction overnight as markets await today’s FOMC policy announcement

UK PM May intends to make a EUR 20bln Brexit payment offer to the EU, according to the FT

Looking ahead, highlights include UK retail sales, DoEs and the FOMC announcement & press conference

ASIA

Asia stock markets saw an indecisive trading day amid a cautious tone ahead of today’s FOMC announcement. The looming risk event initially sapped the momentum from another record close on Wall St. and kept bourses in Australia and Japan subdued, while Chinese markets also conformed to the tentativeness after a significantly weakened liquidity operation by the PBoC. However, sentiment then gradually improved tspanoughout the session which helped Nikkei 225 (Unch), Hang Seng (+0.2%) and Shanghai Comp. (+0.2%) pare losses, although gains were only superficial as focus remained on the FOMC and ASX 200 (-0.1%) continued to lag amid weakness across its major industries. 10yr JGBs were flat with participants sidelined amid an enhanced liquidity auction in which the b/c fell from previous, while the BoJ also kick starts its latest 2-day policy meeting where it is widely anticipated to refrain from any policy tweaks.

PBoC injected CNY 20bln via 7-day reverse repos and CNY 10bln via 28-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.5670 (Prev. 6.5530)

Japanese Trade Balance Total Yen (Aug) 113.6B vs. Exp. 104.4B (Prev. 418.8B). (Newswires)

Japanese Exports YY (Aug) 18.1% vs. Exp. 14.3% (Prev. 13.4%)

Japanese Imports YY (Aug) 15.2% vs. Exp. 11.6% (Prev. 16.3%)

EUROPE/UK

UK PM May said she is confident of getting a consensus on her Brexit strategy at a meeting on Thursday. (Newswires) Telegraph reports have suggested that the UK PM has also made peace with Boris Johnson over Britain’s EU payments. (Telegraph)

UK PM May intends to make a EUR 20bln Brexit payment offer to the EU. (FT)

FX

Price action was restricted by the looming FOMC policy meeting and amid a lack of tier 1 data releases. Nonetheless, the greenback slightly weakened overnight to the benefit of its major counterparts in which EUR/USD broke above 1.2000, while antipodeans also extended on the prior session’s best levels with NZD/USD somewhat helped by better than expected Current Account data.

New Zealand Current Account (Q2) -0.618B vs. Exp. -0.875B (Prev. 0.244B). (Newswires)

New Zealand Current Account Balance To GDP (Q2) -2.8% vs. Exp. -3.1% (Prev. -3.1%)

COMMODITIES

WTI crude futures stuck within its recent range and continued to eye USD 50/bbl to the upside, as a smaller than expected build in headline API crude inventories helped pare some of yesterday’s losses. Elsewhere, copper was flat due to an indecisive risk tone while gold (+0.1%) prices were mildly higher amid a weakened greenback, but with price action contained pre-FOMC.

US API Weekly Crude Stocks 1443K (Prev. 6181K). (Newswires)

US

US treasuries trickled lower in relatively quiet trade with all focus on today’s FOMC decision. A small bid was seen after an ECB sources story which suggested that policymakers were in disagreement on an end date for the bond buying program. Nevertheless, the bid was short lived, while volume was lower than that seen over the last five days. Dec’17 10y T-note futures settled at 125.31+, down 3 ticks.

Senate Health Committee Chair Alexander said that bipartisan health insurance market stabilization discussions have collapsed. US Democratic Senator Murray suggested confidence a deal is still possible if both sides keep working together. (Newswires)

US Republican Senators Corker and Toomey said an agreement was reached on resolution that would allow tax reductions over a period of a decade. (Newswires)