The Nikkei traded nervously today ahead of the Fed and US NFP’s, but knowing it is closed the rest of the week (Golden Week holidays). Some of the exporters did manage to edge ahead but gains were very limited. The overall trend appeared heavy all be it lethargic, but we are watching the Yen trade with a 110 handle just ahead of the Fed announcement. Shanghai also flattish even as the currency traded 6.3522, but worth keeping an eye on steepness of the Off-Shore NDF’s. The Hang Seng drifted (-0.3%) on fears of the possible trade war headlines that are still being banded around. Talks between US/China officials start tomorrow and the results of which will dominate more than just regional Asian stock markets. ASX beat regionals with a positive +0.5% move today with eyes on the A$ (-0.3%) off-sets the margin. Most of the gains seen in the SENSEX today were lost in the final couple of hours trading. We still managed to close firmer, marginally accepted (+0.1%) but the INR has kept the bounce but again still looks vulnerable longer term.

Europe had more disappointing economic data (PMI) and a 13 month low is hitting just a the wrong time. Also, Q1 GDP released below estimates at +0.4% compared to previous +0.7%. Having seen bumper returns for European equities in 2017, it is rumoured many are cashing-out. The weaker currency is helping exporters and we saw that evidenced in the DAX climbing 1.5% today. CAC and FTSE both edged higher but in thin volumes yet again. GBP has held in most of the day, having seen an early rally rejected. Key players are awaiting the Fed and Fridays NFP numbers but the trend certainly remains heavy longer term. Another big day for UK Prime Minister Theresa May as she debates BREXIT again with her cabinet today and the fear of a “No Deal” is again being priced in the cable.

As we know now the Fed left rates unchanged and with no change to its inflation forecast. Interesting response was a resumed USD appreciation and more consolidation for stocks. The treasury market initially saw yields decline but was reversed into the close. Currency and the strength of the Dollar will be what most people talk about tomorrow, especially if you look at some emerging market pairs, but actually also the Euro and GBP. Yen flirts again with the 110 handle and with Japan off for Golden Week, could very well trade comfortably into the 110’s. Gold lost the $5 it recovered at the Fed announcement and therefore makes the psychological $1300 figure very vulnerable for Thursday trading.