World Stocks Reach New Peak as Fed-Focused Week Begins

Gold rebounded from a two-week low to post a modest gain on Tuesday in reaction to a weaker U.S. Dollar.

Markets are pricing in a 56% probability of the Fed raising rates in December.

At 10:59 a.m. ET (1459 GMT), the Dow Jones Industrial Average was up 71.16 points, or 0.32 percent, at 22,339.5, the S&P 500 was up 5.83 points, or 0.233179 percent, at 2,506.06 and the Nasdaq Composite was up 20.94 points, or 0.32 percent, at 6,469.41.

The ICE U.S. Dollar Index DXY, -0.12% which measures the greenback against six of its rivals, was little changed on Wednesday morning at 91.767, on course for a second session of losses. "Given robust risk sentiment, a hawkish Fed surprise is likely to incite a sharp bound in the USD/JPY, which remains tied to the twists and turns of US interest rates", he said.

The market expects the Fed to be hawkish and it hopes that the Fed would not only give out a plan for the balance sheet adjustments but also keep the door open for another rate hike in December.

The Fed is widely expected to say it will start reducing its $4.5 trillion portfolio of government securities, while keeping its interest rates on hold.

Mark Zandi, chief economist at Moody's Analytics, said central bankers will "look through the economic impacts of Harvey and Irma, because they know they're temporary".


The most important event of the week for the US Dollar - and all of FX markets - comes today when the Federal Reserve meets for its September policy meeting, one of the four meetings per year that produces a new summary of economic projections (SEPs) containing the infamous 'dot plot, ' as well as a press conference from Fed Chair Janet Yellen.

U.S. Defense Secretary Jim Mattis hinted on Monday about the existence of military options on North Korea that might spare Seoul from a brutal counterattack.

NORTH KOREA: Markets are also watching Trump's United Nations speech on Tuesday for any mention of military options on North Korea following its latest missile launch. [GBP/] Sterling eased 0.1 percent to $1.3577.

Against the USA dollar and the euro, the kiwi dropped to 0.7303 and 1.6439 from an early 2-day highs of 0.7342 and 1.6349, respectively. Also, refineries were still restarting after recent storm activity. The euro was at $1.1998-2002, up from $1.1993-1993, and at ¥133.66-66, down from ¥133.97-98. Building permits rose by 5.7% to a rate of 1.3 million, slightly higher than an expected 1.22 million.

USA crude futures were down 1 cent at $49.90 per barrel, within sight of Thursday's almost four-month high of $50.50.

Shanghai gained 0.1 percent, while Singapore and Sydney each gained 0.2 percent. The front-month USA oil futures contract was holding onto $50 a barrel at 50.40 as higher than expected crude oil stocks were counterbalanced by a substantial draw in distillate stocks (-5.6 million barrels).


Popular

CONNECT