Central bank decisions, BOJ, dollar


A currency trader monitors exchange rates in a trading room at KEB Hana Bank in Seoul on June 21, 2021.

JUNG YEON-JE | AFP via Getty Images

SINGAPORE – Asia-Pacific markets were expected to trade cautiously on Friday, following overnight losses on Wall Street as investors assessed monetary policy decisions by two key central banks.

Futures showed a moderate open in Japan, where the Nikkei 225 last closed at 29 06.32.

In Australia, stocks rose early in trading, with the benchmark ASX 200 gaining 0.44%.

Friday’s session follows overnight declines on Wall Street, where weakness in major tech stocks pushed down major market averages.

Central banks in the spotlight

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Decisions by the Bank of England and the European Central Bank followed earlier in the week, with the US Federal Reserve saying it would speed up the reduction in its monthly bond purchases, after which the central bank plans to start to raise interest rates.

The Bank of Japan is due to announce its monetary policy decision today and analysts say they don’t expect any substantive changes.

Weak inflation expectations are one of the likely reasons the Bank of Japan will not follow the same direction as the Fed on Friday, wrote Joseph Capurso, head of international economics at the Commonwealth Bank of Australia, in a note from Friday morning.

“All developed economies have faced bottlenecks for certain products,” Capurso said.

“The stark contrast between high inflation in the United States and barely existing inflation in Japan suggests that supply bottlenecks do not dominate the overall inflation trend,” he said, adding, “Other factors such as a very strong demand boost in the United States relative to elsewhere, including Japan is probably behind the exceptional inflationary boost from the United States.”

Currencies and oil

In the currency market, the dollar index fell 0.53% against a basket of its peers at 95.998.

The Japanese yen strengthened 114 to 113.7 against the greenback while the Australian dollar changed hands to $ 0.7176.

Oil prices fell during trading hours in Asia on Friday. US crude futures fell 0.62% to $ 71.93.

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