Asian traders tread cautiously ahead of Fed rate decision

Asian investors traded cautiously Monday as they awaited key US inflation data and the Federal Reserve’s interest rate decision later this week.

Markets globally have enjoyed a broadly strong run-up this month on hopes the US central bank will decide against an eleventh successive hike at the end of the meeting on Wednesday.

Positive readings on jobs in the past few weeks — indicating the economy remained healthy but gave the Fed room to stand pat in June — have added to the broadly upbeat mood, AFP reports.

However, with the policy board split on the best way forward for fighting still-too-high inflation, there remains a certain amount of uncertainty on trading floors.

The decision comes a day after the release of consumer price inflation data, which could play a major role in officials’ thinking.

For now, the forecast is for the Fed to hold this month but announce another hike in July.

Policy announcements from the central banks of Japan, China and the eurozone are also due this week, after Canada and Australia unveiled small increases last week.

Meanwhile, concern about China’s sluggish recovery and signs of further weakness in Europe continued to weigh on sentiment.

After a positive but light lead from Wall Street — with the S&P 500 extending its bull market run — Asian traders struggled on Monday to build on last week’s advances.