Asian equity markets reflect a mixed performance on Wednesday, while uncertainty surrounding a breakthrough in the United States (US)-Iran negotiations has escalated, following Washington’s attacks on southern Iran.

Minneapolis Federal Reserve (Fed) Bank President Neel Kashkari said in the European trading session on Wednesday that the major concern for the central bank now is higher United States (US) inflation than deteriorating labor market conditions; however, the central bank needs to pay attention to both

Rabobank's Senior FX Strategist Jane Foley highlights that despite resilient Swiss growth and firm PMI readings, very low inflation leaves little need for imminent SNB tightening.

France Consumer Confidence registered at 82, below expectations (85) in May

Danske Research Team notes that US equities advanced, with the S&P 500 up 0.6% and the Russell 2000 outperforming with a 1.8% gain. The analysts stress that small caps are unusually strong given a perceived narrow tech-led rally and shifting rate expectations.

Volkmar Baur at Commerzbank notes the RBNZ held rates at 2.25% with a hawkish split vote, pushing market odds of a July hike above 70%.

A Bank of Japan (BoJ) official told Parliament during the Asian session on Wednesday that financial conditions in Japan remain easy, backing strong economic activity, a scenario that leaves room for tightening monetary conditions further.

New Zealand RBNZ Interest Rate Decision meets forecasts (2.25%)

Australia Construction Work Done above expectations (0.9%) in 1Q: Actual (3.4%)

Australia Westpac Leading Index (MoM): 0% (March) vs -0.1%

West Texas Intermediate (WTI) oil price declines after registering more than 3% gains in the previous day, trading around $91.90 per barrel during the Asian hours on Wednesday. Crude oil prices decline as traders weigh potential progress toward a US-Iran peace agreement.

Bank of Japan (BoJ) Governor Kazuo Ueda said that identical oil price hike can produce varied impacts based on wages, expectations, demand, and currency rates, Reuters reported on Wednesday.

Japan Corporate Service Price Index (YoY) fell from previous 3.1% to 3% in April

The Islamic Revolutionary Guard Corps (IRGC) threatened to retaliate after the United States (US) carried out strikes on southern Iran in “self-defence,” CNN reported on Tuesday.  The IRGC also claimed that 25 vessels, including oil tankers, transited Hormuz during the “last day and night.”

South Korea BOK Manufacturing BSI rose from previous 72 to 80 in June

MUFG’s Lloyd Chan highlights that macro headwinds continue to pressure the Indonesian Rupiah, with higher US yields, elevated Oil prices and narrowing rate differentials weighing on IDR against the Dollar.

The Reserve Bank of New Zealand (RBNZ) is widely expected to hold the Official Cash Rate (OCR) at 2.25% for the third consecutive meeting, as the impact of the Iran war continues to hit the economic growth and fuel inflation pressures.

Standard Chartered economists Saurav Anand and Siddharth Sadasivam note that the Central Bank of Sri Lanka raised policy rates by 100bps to curb inflation, cool credit-driven imports and support the LKR.

 Minneapolis Fed President Neel Kashkari said that the central bank could begin “a series of” rate increases as inflation rises, sparked by the Middle East conflict, in comments to Nikkei as he visits Tokyo for two days to attend the Bank of Japan's annual conference.

UOB’s Global Economics & Markets Research, led by Enrico Tanuwidjaja and Vincentius Ming Shen, highlights that Indonesia’s wider current and financial account deficits increase downside risks for the Rupiah.

BNY cites comments from ECB Executive Board member Isabel Schnabel arguing for a June rate increase, as Middle East energy shocks create persistent inflation pressures.

Commerzbank’s Singapore team highlights that Singapore’s Q1 Gross Domestic Product (GDP) was revised sharply higher to 6.0% year-on-year, with strong AI-related demand and robust construction and services activity. Inflation remains contained near the lower end of MAS’s forecast range.

According to ING’s Deepali Bhargava, India has temporarily contained consumer inflation from higher Oil prices by capping retail fuel pass-through, leaving CPI impacts modest so far.

The US Dollar (USD) regains some composure on Tuesday, rapidly reversing Monday’s downtick against the backdrop of persistent uncertainty around the US-Iran peace deal and the reopening of the Strait of Hormuz.

United States 2-Year Note Auction increased to 4.071% from previous 3.812%

Societe Generale analysts examine a low‑probability but severe scenario where the Strait of Hormuz stays shut through 2026, forcing Brent toward and potentially above $200/bbl to trigger sufficient demand destruction.

TD Securities’ US Economic Outlook suggests a higher-for-longer Federal Reserve stance that is typically supportive for the US Dollar. The bank sees stagflationary risks from the Iran conflict, elevated Oil prices, and stressed supply chains keeping inflation high and preventing rate cuts in 2026.

MUFG's strategists flag the Reserve Bank of New Zealand (RBNZ) as a key event risk, with markets expecting no move this week but assigning a meaningful probability to a July rate hike.

United States Dallas Fed Manufacturing Business Index increased to 0.4 in May from previous -2.3

Societe Generale’s Kit Juckes notes that the Euro (EUR) has shown limited reaction to comments from Isabel Schnabel about a June European Central Bank (ECB) rate hike, even as markets price in more tightening.