investy

(C) Reuters. FILE PHOTO: A picture illustration shows U.S. 100-dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao

By Ankur Banerjee

SINGAPORE (Reuters) – The dollar was pinned near five-week lows on Wednesday ahead of the conclusion of the U.S. Federal Reserve’s policy meeting, with investors awaiting clarity on the path the central bank is likely to take in the wake of global banking turmoil.

Investor attention is zeroed in on whether the Fed will stick to its hawkish path to fight sticky inflation or pause interest rate hikes given recent trouble among banks which has included bankruptcy and last-minute rescues.

The U.S. dollar index, which measures the currency against six peers, was at 103.19, just above the five-week low of 102.99 touched overnight. The euro was at $1.0770, hovering around a five-week high of $1.0789 scaled overnight.

Markets are now pricing in about a 15% chance of the Fed not increasing rates, with a roughly 85% chance of a 25 basis point hike, showed the CME FedWatch tool. Just a month earlier, the market was pricing in a 24% chance of a 50 basis point hike.

Investor sentiment remained fragile with worries over the outlook for the banking sector starting to ease after sharp volatility in the market in the past few weeks following high-profile U.S. banking failures earlier in the month and the rescue of lender Credit Suisse Group AG at the weekend.

“Markets are seemingly becoming more comfortable with the idea that authorities have probably done enough to prevent a systemic banking crisis,” said Rodrigo Catril, a senior currency strategist at National Australia Bank (OTC:NABZY) in Sydney.

“It might be early days, but the price action over the past 48 hours is certainly signalling a change in mood by investors.”

The Fed meeting concludes on Wednesday with the 2 p.m. EDT (1800 GMT) release of a policy statement followed half an hour later by a news conference by Chair Jerome Powell.

Catril said the Fed faces a difficult choice given a strong labour market alongside February inflation figures that were higher than many market watchers expected. Such circumstances would usually be ripe for a return to a 50 basis point hike were it not for worries over financial stability, he said.

Christopher Wong, currency strategist at OCBC, said the focus will be on how the Fed communicates its forward guidance, in particular “the higher for longer” rhetoric.

“Ideally, we would like the Fed to go with a 25 basis point hike this meeting, tone down hawkish guidance and emphasize that policy decisions at subsequent meetings will continue to be data-dependent,” Wong said. “This wishlist should see dollar trade on the softer profile and risk proxies trade steadily.”

Meanwhile, the yen strengthened 0.04% to 132.47 per dollar, whereas sterling was last trading at $1.2233, up 0.16% on the day.

The Australian dollar rose 0.36% to $0.6694, while the New Zealand dollar gained 0.11% to $0.6199.

In cryptocurrencies, bitcoin last rose 0.44% to $28,276.58, but was below a nine-month peak it touched on Monday.

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Currency bid prices at 0524 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.0769 $1.0770 -0.01% +0.50% +1.0776 +1.0766

Dollar/Yen 132.4200 132.4900 -0.10% +0.86% +132.7650 +132.2650

Euro/Yen 142.61 142.67 -0.04% +1.65% +143.0300 +142.4300

Dollar/Swiss 0.9226 0.9223 +0.01% -0.24% +0.9230 +0.9215

Sterling/Dollar 1.2228 1.2219 +0.12% +1.15% +1.2236 +1.2209

Dollar/Canadian 1.3701 1.3713 -0.09% +1.11% +1.3718 +1.3700

Aussie/Dollar 0.6694 0.6671 +0.37% -1.78% +0.6696 +0.6662

NZ 0.6201 0.6194 +0.10% -2.35% +0.6204 +0.6173

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(C) Reuters.

By Liz Moyer

Investing.com — Stocks surged on Tuesday ahead of the Federal Reserve’s policy decision, set to be released tomorrow afternoon.

Because of the turmoil in the banking sector over the past week, futures traders are pinning their bets on a quarter of a percentage point increase. A small group of traders believe there will be no increase.

The Fed is still fighting inflation despite evidence that prices have started to cool. Existing home sales bounced in February as the average sale price dipped for the first time in 11 years. Mortgage rates have cooled off and that is bringing buyers back into the market.

Along with the decision on rates and a press conference in the afternoon starring Fed Chair Jerome Powell, the Fed will release the so-called dot plot, a chart representing the policymakers’ economic forecasts. Investors will be watching to compare this month’s dot-plot to the last one in December to see how much their minds have shifted.

Next week brings the latest print of gross domestic product for the fourth quarter and inflation data in the form of the personal consumption expenditure index, a key measure for the Fed on inflation trends.

Here are three things that could affect markets tomorrow:

1. Fed decision

The Federal Open Market Committee’s rate decision will be issued at 14:00 ET, and a press conference will start at 14:30 ET and will be streaming from the Fed’s YouTube page. Along with the rate decision, the Fed will release the dot-plot forecasts for unemployment, inflation, and economic growth. Investors will be comparing the newest forecasts with the ones from December to gauge how much the Fed’s thinking is changing given the turmoil in banking in recent weeks.

2. Chewy earnings

Online pet products retailer Chewy Inc (NYSE:CHWY) is expected to report earnings of 11 cents and revenue of $2.6 billion.

3. KB Home earnings

Amid shifts in the housing sector, home builder KB Home (NYSE:KBH) is expected to report earnings per share of $1.15 on revenue of $1.3B.

(C) Reuters.

By Peter Nurse

Investing.com – European stock markets edged lower Wednesday, weighed by a sharp increase in U.K. inflation ahead of the latest Federal Reserve decision on interest rates.

At 04:40 ET (08:40 GMT), the DAX index in Germany traded 0.1% lower, the CAC 40 in France dropped 0.3% and the FTSE 100 in the U.K. fell 0.2%.

Data released earlier Wednesday showed that inflation accelerated again in the U.K. in February, increasing the pressure on the Bank of England to keep raising interest rates despite the financial turbulence.

The consumer price index rose 1.1% on the month, well above the 0.6% rise expected, taking the headline annual rate back up to 10.4% from 10.1%. Analysts had expected it to fall below 10% for the first time since August.

The Bank of England is set to announce its latest policy decision on Thursday, and is likely to authorize its 11th consecutive rise, even after Governor Andrew Bailey had hinted that the rate-hiking cycle may be coming to an end at his last press conference.

All the policy-makers at the major central banks are having to make judgments about the balance between fighting inflation and banking sector stability.

Bundesbank President Joachim Nagel is on the hawkish side, stating Wednesday in an interview in the Financial Times, that more hikes were needed to combat inflation.

“Our fight against inflation is not over,” Nagel told the newspaper, adding that he certainly felt “price pressures are strong and broad-based across the economy.”

The focus now turns to the Federal Reserve’s interest rate decision later in the day as it concludes its two-day policy-setting meeting.

Investors still widely expect the Fed to hike interest rates by 25 basis points, but there is a great deal of uncertainty over future monetary policy.

In corporate news, Fevertree (LON:FEVR) stock rose 7% after the tonic maker announced plans to hike product prices even as revenues grew and ramp up its U.S. production to help cushion the pressures faced from high costs of manufacturing glass.

Oil prices fell Tuesday after industry data unexpectedly pointed to another week of rising U.S. inventories, a sign fuel demand may be weakening in the world’s largest consumer.

Data from the American Petroleum Institute, released late Tuesday, showed U.S. crude stocks rose by about 3.3 million barrels last week, defying expectations for a drawdown of about 1.6 million barrels.

Confirmation of a rise by the official inventory data, due from the U.S. Energy Information Administration later this session, would see inventories growing for 12 of the past 13 weeks.

By 04:40 ET, U.S. crude futures traded 0.6% lower at $69.26 a barrel, while the Brent contract dropped 0.5% to $74.95.

Additionally, gold futures rose 0.2% to $1,944.85/oz, while EUR/USD traded 0.1% higher at 1.0779.

(C) Reuters

By Peter Nurse

Investing.com – European stock markets are expected to trade in a mixed fashion at the open Wednesday as investors digest U.K. inflation data and nervously await the latest Federal Reserve decision on interest rates.

At 03:00 ET (07:00 GMT), the DAX futures contract in Germany traded 0.2% higher, the FTSE 100 futures contract in the U.K. rose 0.1%, while CAC 40 futures in France dropped 0.2%.

Sentiment has improved in equity markets across the globe, with U.S. Treasury Secretary Janet Yellen saying she was prepared to intervene to protect depositors in smaller banks helping to soothe nerves.

This followed the rescue of troubled lender Credit Suisse (SIX:CSGN) by its Swiss rival UBS (SIX:UBSG), a deal that was brokered and supported by the Swiss government over the weekend.

The focus now turns to a Federal Reserve interest rate decision later in the day, with the central bank policymakers having to strike a balance between fighting inflation and pacifying a banking crisis.

Investors still widely expect the Fed to hike interest rates by 25 basis points, but there is a great deal of uncertainty over future monetary policy given inflation remains elevated but concerns over the stability of the banking system could limit the central bank’s hawkish stance.

Evidence of continued inflationary pressures came from the latest U.K. figures, as consumer prices rose 1.1% on the month in February, up 10.4% on an annual basis.

The Bank of England meets on Thursday and is also expected to lift interest rates once more by another 25 basis points to 4.25%, although Governor Andrew Bailey has signaled he may be prepared to pause rate increases.

The European Central Bank increased its benchmark rates by 50 basis points last week, and Bundesbank President Joachim Nagel said more hikes were needed to combat inflation.

“There’s still some way to go, but we are approaching restrictive territory,” said Nagel, in an interview in the Financial Times, published Wednesday.

Oil prices fell Tuesday after industry data unexpectedly pointed to another week of rising U.S. inventories, a sign fuel demand may be weakening in the world’s largest consumer.

Data from the American Petroleum Institute, released late Tuesday, showed U.S. crude stocks rose by about 3.3 million barrels last week, defying expectations for a drawdown of about 1.6 million barrels.

Confirmation of a rise by the official inventory data, due from the U.S. Energy Information Administration later this session, would see inventories growing for 12 of the past 13 weeks.

By 03:00 ET, U.S. crude futures traded 0.7% lower at $69.19 a barrel, while the Brent contract dropped 0.6% to $74.84.

Additionally, gold futures rose 0.2% to $1,945.05/oz, while EUR/USD traded flat at 1.0766.