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Market mood buoyant ahead of Fed decision

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Asia shares scale multi-year highs

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Trump economic adviser Miran gets Senate nod to join Fed

board

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Investors eyeing slew of Fed cuts by year-end

By Rae Wee

SINGAPORE, Sept 16 (Reuters) - Asia stocks climbed on

Tuesday while the dollar was on the back foot as investors bet

the U.S. Federal Reserve would resume its easing cycle this week

and potentially leave the door open to further rate cuts.

Markets hardly reacted to news that the U.S. Senate narrowly

confirmed Stephen Miran to the Fed's Board of Governors while a

U.S. appeals court separately declined to allow President Donald

Trump to fire Fed Governor Lisa Cook.

Both moves were seen as unlikely to shift the needle for the

Fed's decision on Wednesday, where a 25-basis-point cut is fully

priced in.

"There are certainly concerns around the politicisation of

the Fed and President Trump's pressure...to try to sort of, I

guess, stack the board," said Tony Sycamore, a market analyst at

IG.

"But I think... a 25-basis-point cut still remains in

place."

Expectations of imminent Fed rate cuts have kept the market

mood buoyant over the past few sessions and sent stocks scaling

new highs.

MSCI's broadest index of Asia-Pacific shares outside Japan

rose to a more than four-year top early on

Tuesday and last traded 0.3% higher, while Japan's Nikkei

and Topix indexes notched fresh records.

Just as important for markets will be Fed members' "dot

plot" projections for rates and guidance from Fed Chair Jerome

Powell on the extent and pace of any further easing.

Futures already have 127 bps worth of cuts priced in by July

2026, so anything less than dovish will disappoint investors.

"There do seem to be quite a few rate cuts priced in now. On

balance, maybe that suggests that the bar for a hawkish surprise

is a little lower than that for a dovish one," said Thomas

Mathews, head of markets for Asia Pacific at Capital Economics.

"It's likely though that the Fed will stick with its

cautious communication approach and not give much away."

EUROSTOXX 50 futures eased 0.09% while FTSE futures

gained 0.08%.

Nasdaq futures were flat while S&P 500 futures

dipped 0.02%, after both indexes scaled all-time highs in the

cash session overnight.

Shares of Nvidia ( NVDA ) ended slightly lower after China

on Monday accused the AI chipmaker of violating the country's

anti-monopoly law in the latest escalation in the Sino-U.S.

trade war.

In other news, U.S. and Chinese officials said on Monday

they have reached a framework agreement to switch short-video

app TikTok to U.S.-controlled ownership that will be confirmed

in a Friday call between Trump and Chinese President Xi Jinping.

DOLLAR WOBBLES

The Fed cut bets have in turn kept pressure on the dollar,

which on Tuesday was struggling near a roughly two-month low

against the British pound.

Sterling steadied at $1.3599, while the euro

last bought $1.1758, not too far from a 1-1/2-month

high of $1.1780 hit last week.

The risk-sensitive Australian dollar rose to a

10-month high of $0.6677.

"The Aussie has been outperforming in recent weeks because

markets have been expecting the FOMC to restart interest rate

cuts and that's positive for the global economic outlook, and at

the same time... trade uncertainty has eased," said Carol Kong,

currency strategist at Commonwealth Bank of Australia.

U.S. Treasury yields rose slightly after falling in the

previous session, with the two-year yield last at

3.5409%. The benchmark 10-year yield was up about 1

bp to 4.0451%.

In commodities, oil prices extended their rise from the

previous session, as investors assessed the impact of Ukrainian

drone attacks on Russian refineries.

Brent crude futures rose 0.25% to $67.59 per barrel,

while U.S. crude edged 0.22% higher to $63.44 a barrel.

Spot gold scaled a record high of $3,689.27 an ounce,

supported by a weaker dollar and Fed cut expectations.