FX168 Financial News (Asia Pacific) News On Wednesday (September 18), the US dollar recovered some of its overnight gains, while the Asian stock market was in trouble as traders weighed the chances of the Federal Reserve's possible sharp interest rate cut that day.

MSCI Asia Pacific (excluding Japan)'s broadest stock index fell 0.27%. China's blue-chip stocks fell 0.18% when they returned to trading after the holiday season, and Taiwan also plummeted 1% after a day of market closure. Australia's benchmark stock index fell 0.1%. #决策分析 #

Japan's Nikkei Average rose 1.3% due to the weakening of the yen overnight, but in the end, the increase narrowed to 0.23%, as the yen rebounded. Hong Kong and South Korea were among the main markets closed on Wednesday due to the holidays.

The Wall Street stock market was almost flat on Tuesday, failing to maintain the early momentum of boosting the S&P 500 index and the Dow Jones index to record intraday highs. S&P 500 futures rose slightly by 0.06% on Wednesday.

Kyle Rodda, senior financial market analyst at Capital.com, said: “US price movements reflect significant turning points facing the market. If the Federal Reserve responds perfectly at this meeting, the bull market is likely to continue. If unsuccessful, this could mean a high point for this cycle.”

The unexpectedly strong US retail sales data on Tuesday weakened market expectations for aggressive interest rate cuts by the Federal Reserve. The dollar fell sharply against the yen, taking back about half of Tuesday's gains. However, US short-term Treasury yields have risen slightly.

According to LSEG data, during the Asian trading session, the probability that the Fed will cut interest rates by more than 50 basis points when starting the interest rate cut cycle fluctuated, falling from 67% in the same period on Tuesday to 63%, and then stabilized at about 65%.

The dollar fell 0.67% against the yen to 141.365, despite an overnight increase of 1.26%. The euro rose 0.05% to $1.1119. The pound held steady at $1.3158.

Meanwhile, two-year US Treasury yields rose slightly to 3.5962%, continuing Tuesday's gains.

Commonwealth Bank of Australia analyst Kristina Clifton expects the Federal Reserve to cut interest rates by 25 basis points “because history shows that the Federal Open Market Committee (FOMC) needs a good reason to exceed 25 basis points when starting a cycle of interest rate cuts.”

However, she said that under a more aggressive easing policy, the US dollar's reaction may be significantly different.

She said, “If the 50 basis point interest rate cut causes the market to worry about the future of the US economy, the dollar may rise as a safe-haven currency. However, interest rate cuts of 50 basis points may weaken the dollar if they ease market concerns about the future of the US economy.”

Meanwhile, gold struggled to find support on Wednesday, falling slightly by 0.1% to $2,567, before falling from a record high the day before.

Crude oil prices also fell after rising about $1 on Wednesday as tension in the Middle East escalated. U.S. crude futures fell 49 cents to $70.70, and Brent futures fell 47 cents to $73.23.

The armed group Hezbollah has vowed revenge against Israel. An explosion occurred in Lebanon on Tuesday, killing at least 8 people and injuring nearly 3,000 others.

Meanwhile, the United Nations Mission in Libya said that the various factions in Libya failed to reach a final agreement in negotiations aimed at resolving the central bank crisis, which has drastically cut oil production and exports.