Dollar up and stocks down before Fed meeting details
The dollar rose to its highest level in a week yesterday and world stocks fell for the third day as investors braced for minutes from the Fed's last policy meeting to see if they would herald more rises in interest rates and global bond yields.
Wall Street looked set for a weaker session, with equity futures down around 0.2pc and the VIX volatility gauge up for the third day in a row.
The dollar index, which measures the greenback against a basket of peers, rose 0.2 percent.
The index has bounced almost 1pc so far this week, after slumping 1.5pc the previous week to its lowest level in three years .
MSCI's world index of stocks was down 0.1pc, set for its third straight decline this week, as a down day in Europe offset earlier gains in Asia.
The last readings of US wages and inflation came in higher than expected, with some blaming the numbers for a violent sell-off in stocks earlier this month.
"Markets are particularly sensitive to inflation, and we think the odds that the minutes reinforce the narrative of firming inflation are high," said Elsa Lignos, RBC's global head of FX strategy.
"We think there is a high probability that the Fed moves the dots to four hikes in 2018 (from three) near-term, and that the minutes could be another step in that direction."
The US currency has been weighed down this year by concerns that Washington might pursue a weak-dollar strategy, and by the perceived erosion of its yield advantage as other countries start to scale back their easy-money strategies.
Confidence in the dollar has also been shaken by mounting worries over the US budget deficit.
But the greenback appeared finally to be benefiting from rising US bond yields, especially as the Treasury Department is issuing more debt in anticipation of a higher deficit from last year's tax overhaul and plans to increase federal spending.
As markets braced for the next wave of this week's $258bn (€210bn) deluge of new debt, two-year and 10-year yields eased a touch, with the former retreating from nine-year highs of 2.282 percent, hit on Tuesday.
German bond yields, the benchmark for Europe, fell to two-week lows after weaker-than-expected business activity data in the two biggest euro zone economies.