Asian stocks set for mixed trading ahead of Powell

Asian Stocks Trade Mixed Ahead of Powell Testimony Markets WrapMore

U.S. stocks ended mixed on Tuesday, as Wall Street waited for the upcoming monetary policy testimony of U.S. Federal Reserve's head to the U.S. Congress, in efforts to search for more signals for further rate cut moves.

MSCI's broadest index of world stocks was little changed after three days of losses. E-Mini futures for the S&P 500 ESc1 were flat, while EUROSTOXX STXEc1 and FTSE FFIc1 futures pointed to small opening gains in Europe.

Japan's Nikkei had also finished lower and Chinese blue chips barely budged as data showed inflation remained subdued.

Federal Reserve Chair Jerome Powell, who struck a dovish tone before a congressional panel Wednesday, returned to Capitol Hill to answer senators' questions and suggested that the central bank has room to ease as the tie between the inflation and jobless rates has broken down. Expectations for a 50 basis point (bps) rate cut at a Fed meeting later this month have evaporated, but investors still expect a 25 bps cut due to weak inflation and worries about growing business fallout from the US-China trade war. Yet the robust jobs report released on July 5 has scaled down expectations on more aggressive interest rate cuts. Visit MarketWatch.com for more information on this news.

Observers said that while a big cut - of half a percentage point - has all but been dismissed, the Fed is expected to unveil at least a quarter-point reduction at its next gathering this month.

Powel's comments come at a sensitive time for both the Fed and the USA administration, with President Donald Trump proposing that the U must also do some currency interventions to bolster the economy.

Lurking in the background, U.S. and Chinese trade officials held "constructive" talks on trade by phone on Tuesday, White House economic adviser Larry Kudlow said.

As of 1230 BST, Dow and S&P 500 futures were both down 0.23%, while Nasdaq-100 futures had that index opening 0.25% lower.

The cooling in US rate fever has seen bonds give back just a little of their rally.

The yield on 10-year Treasuries fell one basis point to 2.04%.Australian 10-year bond yield rose 1 basis point to 1.33%. Should Powell sound less dovish than expected during his testimony, the Dollar Index could push higher with 97.80 acting as a level of interest.

The Mexican peso was nursing a few bruises after sliding yesterday when the country's moderate Finance Minister Carlos Urzua suddenly resigned, citing "extremism" in economic policy.

The Canadian dollar was on the defensive before a Bank of Canada meeting, in case policymakers tried to slow the currency's recent rally.

Gold dipped 0.9% to $1,406.17 an ounce.

Oil prices rose on Middle East tensions and news that USA stockpiles fell for a fourth week in a row. US West Texas Intermediate (WTI) crude futures shed 0.42% to $57.42.

The cooling in US rate fever has seen bonds give back just a little of their huge rally, with yields on two-year Treasuries US2YT=TWEB rising to 1.917% from the recent trough of 1.696%. Oil's climb was triggered by constrained United States supplies, with production in the Gulf of Mexico being reduced by about a third given the possibility of an incoming hurricane, along with the steep decline reported in U.S. crude inventories.

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