US-China trade, Fed exchange rate decision, currencies in focus

Shares in Asia traded lower Wednesday morning amid expectations of a resolution against the US-China trade war. Meanwhile, investors are awaiting the US Federal Reserve announcement of its interest rate decision, which would happen later on Wednesday, stateside.

Mainland Chinese stocks fell in early trade, with Shanghai compound throwing 0.61% and Shenzhen component falling 0.56%. The Shenzhen composite also fell 0.535%.

In Hong Kong, the Hang Seng index fell 1.15% as the shares of life insurance company AIA fell 1.64%.

Nikkei 225 in Japan slipped 0.92% in morning trading, with stocks on index heavyweight Fixed Retail which fell 1[ads1].57%. The Topix index also fell 0.7%.

South Korea's Kospi traded 1.12% lower. Shares of industry heavyweight Samsung Electronics fell by 2.69% after the company reported a 56% drop in profits in the second quarter compared to a year ago.

Over in Australia, the S & P / ASX 200 slipped 0.27%.

the MSCI Asia ex-Japan index fell 0.6%.

China's factory activity falls again

China's factory activity fell in the third third month of July, according to official data released earlier Wednesday.

Official Industry Purchasing Leaders Index (PMI) for July came to 49.7, according to data from the Chinese Statistics Office. Economists polled by Reuters had expected factory activity in China to reach 49.6 from the June reading of 49.4. A PMI reading above 50 indicates enlargement, while below it it signals contraction.

Asia-Pacific Market Indexes Chart

US-China Trade, Fed Interest Rate Focus

U.S. President Donald Trump said in a series of tweets Tuesday that China does not keep its promise to buy more US agricultural products. For its part, China insists it has bought US agricultural products.

Trump's comments come as US-China trade talks take place in Shanghai from July 30 to July 31, as the two economic power plants aim to reach an agreement to end a protracted trade war.

Meanwhile, the Fed is willing to deliver its interest rate decision later Wednesday, with expectations that it will cut interest rates by a quarter. Investors will also look for clues from Powell on potential interest rate cuts later this year. Currently, traders are pricing in at least two interest rate cuts of 25 basis points before the end of the year, according to CME Group's FedWatch tool.

Kathy Lien, CEO of Foreign Exchange Strategy, "The Fed has given us zero reason to expect anything other than a quarter-point cut, so the change in interest rates will be the smallest market-leading part of the statement (Federal Open Market Committee)." note.

"Instead, US dollar traders should be focused on the voices and guidance ahead," Lien said.

Currencies and Oil

The US dollar index, which tracks the greenback against a basket of its peers, was on 98,069 after slipping from levels above 98.1 yesterday.

The Japanese yen, often viewed as a safe harbor currency, traded at 108.54 against the dollar after strengthening from levels above 108.8 in the previous session The Australian dollar changed hands to $ 0.6885 after going from $ 0.690 in yesterday's trading.

Oil prices rose the morning after Asian trading hours, with international reference Brent crude futures leaving 0.68% to $ 65.16 per barrel and US crude futures gained 0.67% to $ 58.44 per barrel.

Here's a look at what's ahead today:

  • Japan: Consumer Trust for July at 1:00 pm HK / SIN
  • Japan Revenue: Nomura, Mizuho Financial, Mitsubishi UFJ Financial Group, Daiwa Securities, Mitsui, Panasonic

– Reuters, along with CNBC's Fred Imbert and Huileng Tan contributed to this report.

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