Asia markets up slightly as investors expect the Fed to cut rates

In Japan, the Nikkei 225 was fractionally up at 20,789.14 while the Topix index slipped 0.18%.

Australia’s benchmark ASX 200 rose 0.35%, with most sectors trading up. The heavily weighted financial subindex was up 0.21% as major banking stocks advanced.

Markets in South Korea are shut for a public holiday.

Analysts said markets are already beginning to price in the possibility of rate cuts after Fed Chair Jerome Powell said the U.S. central bank will keep an eye on developments in the domestic economy, and would do what it must to “sustain the expansion. ”

“US markets firmed slightly overnight on the anticipation of rate cuts and news that President (Donald) Trump wants a deal with Mexico, although little progress was made,” analysts at ANZ Research wrote in a morning note.

The U.S. and Mexico failed to reach a deal on immigration issues during a Wednesday meeting, just days before 5% tariffs on all Mexican imports are set to kick in. Trump announced those duties in a surprise tweet last week, saying they would be imposed “until such time as illegal migrants coming through Mexico, and into our Country, STOP.”

In the currency market, the U.S.dollar index, which measures the greenback against a basket of its peers, last traded at 97.32, lower than levels above 98.00 reached in the previous week.

The Japanese yen, considered a safe haven asset, traded at 108.27 to the dollar, strengthening from levels near 109.90 last week. Meanwhile, the Australian dollar changed hands at $0.6972, climbing from levels near $0.6920 previously.

Oil prices fell overnight, following an unexpected rise in U.S. crude inventories. U.S. crude futures declined 3.4% to $51.68 a barrel while the international benchmark Brent fell 2.2% to $60.63.

Crude inventories rose 6.8 million barrels whereas analysts had expected a 849,000-barrel drawdown, Reuters reported.