EQUITIES

The broader Asia-Pacific markets were lower on Wednesday trade. The Nikkei 225 in Japan leading losses in the region as it fell 1.35%. The Hang Seng index in Hong Kong slumped 0.24%, and the Shanghai composite fell 0.59%.

In other markets, the Australia’s S&P/ASX 200 traded 0.80% lower, and the S&P BSE Sensex in India shed 0.64%. In Singapore, the Straits Times index slipping 0.25%, while the South Korea’s KOSPI was flat.

Overnight on Wall Street, the Dow Jones Industrial Average fell 0.24%, to 35,058.52, the S&P 500 lost 0.47%, to 4,401.46 and the Nasdaq Composite dropped 1.21%, to 14,660.58.

OIL

Oil prices rose as industry report showed a decline in the U.S. fuel and crude stockpiles, adding to signs of a tightening market, thus outweighing worries about the consequences of surging COVID-19 cases.

The Brent traded at $74.90 per barrel, and U.S. crude futures traded at $72.05 per barrel.

Overnight, the Brent closed at $74.480, while WTI ended at $71.65 per barrel.

CURRENCIES

The yields on U.S. 10-year notes steadied on Wednesday at 1.256%, having fallen for four weeks in a row.

The dollar rested with traders reluctant to place large bets ahead of the outcome of the FOMC meeting. The U.S. dollar held steady below its 3-1/2-month peak scaled last week, was at 92.464 following a recent drop from above 92.7.

GOLD

Gold prices were flat, as investors await the U.S. Fed’s meeting for hints on policy tapering plans. Spot gold added to $1,805.60 per ounce, while the U.S. gold futures gained to $1,806.40 per ounce.

Silver was flat at $24.84, Palladium gained 0.45% to $2,618.50 per ounce, while platinum rose 0.74% to $1,057.30.

ECONOMIC OUTLOOK

Asian shares stayed stuck at seven-month lows on Wednesday, as markets continued to digest a storm in Chinese equity markets and taking its cue from the overnight fall on Wall Street.

Although investors shifting their focus from daily COVID-19 infections to the positive vaccination rate, local sentiment may remain cautious following the negative performances in China and Hong Kong.

Chinese stocks have been falling since opening of the week as regulatory crackdowns in China roiled stocks in the technology, property, and education sectors, leaving international investors bruised.

The IMF maintained its 6% global growth forecast for 2021, upgrading its outlook for the U.S. and other wealthy economies but cutting estimates for developing countries struggling with surging COVID-19 infections.

Fed's policy statement is due at 1800 GMT later in the day followed by a news conference by Chairman Jerome Powell. Markets will be watching closely for any hints in relation to inflation, economic growth, interest rates and when the Fed will likely start reducing its purchases of government bonds.

TECHNICAL OUTLOOK

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 110.374 and 110.672.

-        Support line of 109.412 and 109.114.

Commentary/ Reason:

1. The dollar bought 109.769 yen, scaled slightly higher on Wednesday after it touch a 1-week low overnight.

2. The dollar was undercut by the decline in the 10-year T-note yield. A slump in stocks on Tuesday meanwhile provided some support to the dollar on increased liquidity demand.

3. The yen saw support from the July 15-16 meeting earlier today, where the BOJ kept monetary policy steady and extended the deadline for the pandemic-relief scheme in July.

4. Market's focus today will be on Fed's policy statement fur further trading clues.