In This Article:
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Asian stock markets : https://tmsnrt.rs/2zpUAr4
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Nikkei bounces, S&P 500 futures edge higher
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Markets brace for BOJ to end negative rates
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Fed seen on hold, but might signal slower rate cuts
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Dollar keeps gains, yen on defensive for now
By Wayne Cole
SYDNEY, March 18 (Reuters) - Asian shares idled and the dollar held firm on Monday as investors looked to navigate a minefield of central bank meetings this week that could see the end of free money in Japan and perhaps a slower glide path for U.S. rate cuts.
Central banks in the United States, Japan, UK, Sweden, Switzerland, Australia, Brazil and Mexico all meet and, while most are expected to hold steady, there is plenty of scope for surprises.
Tuesday could see the end of an era as the Bank of Japan is now widely tipped to end eight years of negative interest rates and cease or amend its yield curve control policy.
The Nikkei newspaper on Saturday became just the latest media outlet to flag the move, after major companies granted the biggest pay hikes in 33 years.
There is a chance the BOJ might wait for its April meeting given it will be issuing updated economic forecasts then.
"Whether or not it is March or April, we suspect the language accompanying any such move will carry a cautious tone, emphasising it more as a monetary policy adjustment rather than a tightening at this stage," said Carl Ang, a fixed income analyst at MFS Investment Management.
"For Japan a measured and gradual path of policy normalisation appears appropriate for an economy unaccustomed to higher rates and thus the policy messaging will be critical."
Markets also assume the BOJ will hike at a snail's pace and have a rate of 0.27% priced in by December, compared with the current -0.1%.
That might be one reason the yen actually lost ground last week, with the dollar gaining 1.4% to trade at 149.00 yen . The euro stood at $1.0883, having eased 0.5% last week and away from a top of $1.0963.
Japan's Nikkei bounced 0.8%, having shed 2.4% last week as a run up to record highs drew some profit taking.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.1%, after dipping 0.7% last week. Chinese data on retail sales and industrial output for February due later Monday are potential hurdles for the market.
S&P 500 futures and Nasdaq futures were both up 0.1%, with tension building ahead of the Federal Reserve policy meeting in Tuesday and Wednesday.
COUNTING THE DOTS
The Fed is considered certain to keep rates at 5.25-5.5%, but there is a possibility it might signal a higher for longer outlook on policy given the stickiness of inflation at both a consumer and producer level.