Asian equities could trade choppy amid indecisive price action on Wall Street as US Treasuries Yields once again weighed on risk assets. After a beat on the UK CPI data and Canada, global inflationary headwinds added to the negative sentiment. Traders will watch the USD and US yield’s correlation with risk assets ahead of key Fed decisions in the first week of November, with Fed speakers entering the blackout period this Friday.
On a technical note, participants are also hunting for liquidity ahead of Friday’s US equity options expiry. This could add some volatility going into the last trading day. Desks are also paying close attention to any FX or rate verbal or factual interventihttp://bit.ly/2OJjKKRon from the Bank of Japan as the Yen continued its weakening trend amid widening US yield differentials with USD/JPY edging closer to the 150.00 level. The credit market is also trading on key resistance as the Japanese 10-year bond yield rose above the BoJ’s 0.25% ceiling for the first time since July. The Yuan is also being monitored as the offshore rate traded to fresh record highs against the USD amid headwinds from rates different from China’s divergence in monetary policy cycles. It is worth noting that the 1-year and 5-year LPR rates decisions are scheduled for later in the session, although they may not be released given the ongoing Party Congress and delays to other data releases this week. But participants don’t expect any dovish or hawkish change today.
