Federal Reserve, currencies, oil in focus

Stocks in Asia Pacific were set to trade mixed at the open as investors react to developments from the U.S. Federal Reserve.

Futures pointed to a higher open for Japanese stocks. The Nikkei futures contract in Chicago was at 23,240 while its counterpart in Osaka was at 23,220. That compared against the Nikkei 225’s last close at 23,208.86.

Shares in Australia were set to decline, with the SPI futures contract at 6,076.0, as compared to the S&P/ASX 200’s last close at 6,126.20.

Fed Chairman Jerome Powell announced Thursday a major policy shift by the U.S. central bank to “average inflation targeting.” That means the Fed will allow inflation to run “moderately” above the central bank’s 2% goal “for some time” after periods when it has run below that objective.

The Fed also adjusted its view of full employment to allow gains in the labor market to run more broadly. That indicated that the central bank will be less inclined to raise interest rates when the unemployment rate falls, as long as inflation does not creep up as well.

“All this adds up to a view that the Fed Funds rate  is going nowhere at least until the Fed can look 2%+ inflation in the whites of its eyes,” Ray Attrill, head of foreign exchange strategy at National Australia Bank, wrote in a note. “Rates have barely budged at the shorter end of the yield curve, the money market not priced for a first Fed Funds rate rise until about four years from now.”

Overnight stateside the Dow Jones Industrial Average added 160.35 points, or 0.6%, to close at 28,492.27. The S&P 500 ended its trading day 0.2% higher at 3,484.55 while the Nasdaq Composite slid 0.3% to close at 11,625.34.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 93.001 after seeing levels around 93.3 earlier.

The Japanese yen traded at 106.66 per dollar after weakening yesterday from levels below 106.4 against the greenback. The Australian dollar changed hands at $0.7256 after following its rise earlier this week from below $0.72.

— CNBC’s Jeff Cox contributed to this report.

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