Asia shares make the most of Fed messaging, dollar slips on yen

People pass by an electronic screen showing Japan’s Nikkei share price index inside a conference hall in Tokyo, Japan June 14, 2022. REUTERS/Issei Kato

SYDNEY, July 28 (Reuters) – Asian shares made guarded gains on Thursday as investors scented a possible slowdown in the pace of U.S. rate hikes, comforting bond markets and sending the dollar to a three-week low on the yen.

The U.S. Federal Reserve surprised no one by lifting rates 75 basis points (bps) to 2.25-2.5% on Wednesday, but did alter its statement to cite some softening in recent data.

Fed Chair Jerome Powell sounded suitably hawkish on curbing inflation in his news conference, but also dropped guidance on the size of the next rate rise and noted that “at some point” it would be appropriate to slow down. [ read more

“The Fed no longer feel behind the curve and can now assess the appropriateness of policy ‘meeting by meeting’,” said Elliot Clarke, a senior economist at Westpac.

“This is not to say that the rate-hike cycle is complete or even that a pause is coming, but risks look as though they are transitioning from being skewed to the upside to the downside.”

The futures…