Asian Markets Brace for Central Bank Decisions

Investors in Asia are entering a critical 24-hour period marked by caution, with stocks declining and risk appetite subdued. The focus is on the Federal Reserve's interest rate decision later today and the Bank of Japan's announcement tomorrow.

Ahead of these major announcements, the central banks of Thailand and Indonesia are also set to deliver their latest policy decisions. Both are expected to maintain their interest rates at 2.25% and 6.00%, respectively.

The 'risk off' sentiment in Asia today follows global market movements yesterday, which saw significant losses in world stocks and Wall Street, a steady dollar, and a one-month high in the 10-year U.S. Treasury yield.

Surprisingly strong U.S. retail sales figures did not alter expectations of a quarter-point U.S. rate cut today. This, along with other strong economic indicators, reinforces the perception of a relatively hawkish Fed heading into next year.

Emerging markets are particularly sensitive to the rising 'term premium' on 10-year U.S. Treasuries and the generally strong dollar, especially against Asian and emerging currencies.

Key developments to watch today include the interest rate decisions from Thailand and Indonesia, as well as the U.S. interest rate decision.