ASIA-PAC MARKET WRAP: Asia dampened as bourses and central banks react to the Fed hike; while Chinese data also failed to inspire

Asia equity markets were mostly subdued as the regional bourses and central banks reacted to a hike from the Fed under Yellen’s last meeting. ASX 200 (-0.2%) was indecisive and pared the early mining-led gains, while Nikkei 225 (-0.3%) was hampered by USD/JPY woes post-FOMC. Hang Seng (-0.5%) and Shanghai Comp. (-0.4%) traded subdued as participants mulled over Chinese Industrial Production and Retail Sales figures which either printed inline or below estimates. Furthermore, the HKMA and PBoC responded to the FOMC with the base rate in Hong Kong raised by 25bps in lockstep with the Fed, while the PBoC increased rates by 5bps on 1-year MLF loans and on its Reverse Repo operations. Finally, 10yr JGBs were rangebound despite the subdued risk tone in Japan, while the 20yr auction also failed to spur demand with most metrics inline with the previous month.

In FX markets, the greenback remained weak against its major counterparts after yesterday’s US Core CPI miss and in the absence of any hawkish surprises from the FOMC where Fed’s Evans and Kashkari both dissented, while the rate path trajectory was also kept broadly the same despite fiscal stimulus being incorporated into forecasts. As such, EUR/USD and GBP/USD traded around post-FOMC highs after having reclaimed the 1.1800 and 1.3400 handles respectively, while USD/JPY languished at a sub-113.00 level. Elsewhere, AUD outperforms with AUD/NZD up by about 80 pips for the session on a stellar jobs report and after a gradual pull-back in NZD/USD amid lower NZ government growth forecasts.

14 Dec 2017 - 05:53- Important- Source: RANsquawk

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