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With Greece and China slipping off the table, investors are turning their attention to the US where the earnings season is underway.
Moreover, traders are positioning for the FOMC next week, although the week-long media blackout from Fed officials provide ample room for speculations.
Expectations are built towards a September rate lift-off and were bolstered by St Louis Fed President Bullard, who is a non-FOMC voter as well as a notable hawk.
However, with few global data and events today to excite the market, we may see a directionless drift in Asian markets on Wednesday. Regional investors would look to domestic data for trading clues.
In Japan, notable data includes the All Industry Activity Index for May as well as the June machine tool orders. Meanwhile, the Nikkei came under pressure in early Asia after advancing for the last six sessions, as Yen regained some strength.
There could also be profit booking interests after the Index climbed to near 18-year highs yesterday. China may continue to show some modest recovery momentum, with the CSI 300 now well above 4000, although the absence of major economic releases and news could keep investors on the sidelines.
The largely retail investor base may also be cautious after the recent correction and subsequent harsh state intervention caused some damage to confidence as well as financial losses.
Nonetheless, there are still a couple of arches in today’s market. The US dollar fell the most in a month, after running up on Fed Bullard’s comments. The market has also priced in a higher probability of a rate increase in September at 36%, from 31% a week ago.
Investors may have realised that a rate hike in September is not a done deal and proceeded to unwind some of their long USD positions. Commodities also saw some stabilisation, which helped to put a floor under currencies linked to commodities. The AUD/USD rebounded to 74.0 while the USD/CAD eased off from 1.30.