Asia stocks slip, dollar sell-off eases as dovish Fed cheer fades. Wednesday saw Asian markets retreat from 2-1/2-month highs while the dollar gained ground as investors reduced their initial joy over the possibility of a halt to U.S. interest rate hikes.

The MSCI broadest index of Asia-Pacific equities outside of Japan (.MIAPJ0000PUS) was down 0.54%, slightly retracting after rising almost 3% over the previous week and reaching its highest level since Tuesday. Nikkei (.N225) in Japan increased by 0.29%.

The S&P 500 (.SPX) lost 0.2% overnight, ending a run of five consecutive sessions of gains. Chipmaker Nvidia (NVDA.O) posted revenue after market close that was significantly higher than Wall Street forecasts, but the company’s pessimistic sales outlook for China caused shares to drop 1.7%.

During Asian hours, Nasdaq futures saw a 0.2% decline, while S&P 500 futures saw minimal movement. The U.S. Thanksgiving holiday on Thursday is expected to lighten volumes for the remainder of the week.

With FTSE futures up 0.06%, German DAX futures up 0.08%, and Eurostoxx 50 futures up 0.05%, European equity markets are expected to begin mutedly. Naka Matsuzawa, chief macro strategist at Nomura, wrote a letter to clients stating, “It appears that the short cover rally that began after the November (Fed meeting) is winding down and that buying and selling are beginning to alternate.”

The Federal Reserve released the meeting minutes overnight, but traders believed that the directive to “proceed carefully” from this point forward was not new.

In Asia trade, ten-year Treasury rates were slightly lower at 4.3910%. Since the Fed maintained rates stable early in the month, they have decreased by roughly 50 basis points. Interest rate futures markets price in roughly 90 basis points of rate reductions through 2024, with a 30% possibility that they start as early as March and nearly no likelihood that the Fed will increase again.

Philip Marey, senior U.S. strategist at Rabobank, stated, “It would be foolish to risk it by hiking further than necessary since the Fed believes that a soft landing is in sight.” “Longer-term rates will probably rise again and replace a rate hike if we get better inflation and economic statistics before the December meeting. As a result, we do not anticipate more increases.”

FUTURES OF THE YEN

Since last week’s positive U.S. inflation report, the dollar has declined in foreign exchange markets. However, it has recovered from multi-month lows for some peers.

It was essentially unchanged at $1.09065 to the euro on Wednesday, but it did go up to 148.77 yen. After retreating on Tuesday from resistance at its 200-day moving average of $0.6588, the Australian dollar was maintained at around $0.6541. Capital Economics senior economist Jonathan Petersen said, “We expect bond yield gaps to remain a tailwind for the yen and renminbi as inflation in the U.S. continues to moderate and investors discount more rate cuts from the Fed.”

“On this front, prospects for the yen look particularly promising… risks are skewed towards the Bank of Japan again being an outlier in monetary policy, but this time raising its policy rate when most other major central banks are cutting.”

In a Reuters survey, over 80% of economists predicted the Bank of Japan would abandon its hostile interest rate policy in the coming year, and a growing number of respondents were certain the central bank was close to ending its divisive monetary stimulus program.

At 7.1403, the Chinese yuan, which has increased by 2% over the last week and led Asian currencies higher vs. the U.S. dollar, held steady. According to two sources who spoke to Reuters on Tuesday, China’s central state-owned banks have been purchasing yuan to speed up its recent recovery.

Regarding data, a rebound in tourism helped Singapore’s economy grow more quickly than initially anticipated in the third quarter. U.S. jobless claims are due on Wednesday, and Reserve Bank of Australia Governor Michele Bullock will give a speech later in the day.

In the commodities markets, the day’s low for Brent crude futures was $82.32 per barrel, a decrease of 0.16%. Singapore iron ore futures were maintained at $131 per tonne, up over 10% for the month. In the wake of Binance CEO Changpeng Zhao’s resignation and guilty plea to violating U.S. anti-money laundering rules as part of a $4.3 billion settlement that ended a protracted investigation into the cryptocurrency exchange, Bitcoin fell 1% to $36,416,16.