Most equity markets opened lower ahead of the FOMC with the exception of Chinese shares, which rallied on the back of the China Politburo’s statement overnight. The Shenzhen index rose 1%, and Shanghai Composite gained 0.6%, led by property stocks. Elsewhere, the Nikkei dropped 0.4%, Malaysia KLCI and Sensex slid 1%, while S&P futures rose marginally.
The USD extends its rally against EM Asian FX. Fitch’s revision of Malaysia’s sovereign rating outlook to negative pushed USDMYR above 3.24 on the open, where it seems to have run into central bank intervention. USDINR opened sharply higher to 61.05, and forwards traded near record highs. G10 was largely range-bound with USDJPY at 98.0, and EURUSD at 1.326. AUD are trying to test 0.90 levels, while NZD is more resilient thanks to strong business survey data.
China’s rate structures remain high, with the 7day repo rate easing only marginally to 4.98% from 5.10% yesterday.
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Credit Suisse