Stocks hit new high but all eyes on the Fed

Xavier Trudeau
Septembre 23, 2017

"It is just telling in terms of where the sentiment is for the U.S. dollar", said Erik Nelson, currency strategist at Wells Fargo Securities in New York.

But with the Fed due to unveil its policy decision and economic forecasts at 1800 GMT, caution prevailed. The Russell 2000 index of smaller-company stocks declined 0.1 percent, to 1,440.40. The risk of loss in trading futures and options can be substantial.

The two-day Fed meeting will end on Wednesday with a statement on monetary policy.

Miners BHP Billiton, Rio Tinto and Fortescue Metals Group dropped 1% to 3% as Chinese iron ore futures succumbed to selling pressure for a fifth consecutive session. The yield fell to 2.016 percent on Sept. 8, the lowest since Nov. 10, 2016. Policymakers from the Bank have reinforced that message in subsequent comments.

A relatively quiet North Korea and U.S. Secretary of State Rex Tillerson's comments on a "peaceful solution" over the weekend eased some concerns for investors. It has made session high at 1.2388 and lows at 1.2191 levels.

The US central bank also said after a two-day meeting it will begin reduction of the Fed's US$4.5 trillion balance sheet in October by allowing small amounts of Treasuries and mortgage-backed securities to run off. Oil prices were higher. Hong Kong's Hang Seng index added 0.3 percent to 28,117.50.

The euro currency is higher after a report showed German investor confidence increased for the first time in four months in September.

Global stock markets inched higher on Tuesday and the dollar dipped as investors awaited signals from the U.S. Federal Reserve on when it will hike interest rates again and start shrinking its balance sheet. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.

HSBC's Fan expects a cut in the second quarter next year. "The last thing the Fed wants to do is to threaten financial stability".

Will the US Federal Reserve raise interest rates at this week's two-day meeting?

In currencies, the dollar gained as much as 0.5 percent against the yen to hit 111.42, its highest since late July.

The S&P financial index .SPSY gained 0.8 percent ahead of the Fed statement.

Support for the National Party jumped six points to 46 per cent, according to the One News-Colmar Brunton opinion poll, while support for the opposition Labour party slumped by seven points to 37 per cent.

OIL: Benchmark U.S. crude rose 1.1 percent to $50 a barrel on the New York Mercantile Exchange while Brent crude, used to price international oils, advanced by the same rate to $55.77 per barrel in London.

The Fed's possible move to roll stimulus back further has not stemmed the greenback's weakness this year as other major central banks are considering steps either to slow their bond purchases or raise interest rates.

Some details of Trump's tax reform plans may also emerge this week, while elections in Germany and New Zealand will add extra political uncertainty to the mix.

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