Markets up, dollar steady ahead of Fed rate decision
Stocks rose yesterday, but worries about stretched valuations and caution before a near-certain rate hike by the US Federal Reserve kept their gains in check, while the dollar steadied against a basket of major currencies.
On Wall Street, the S&P 500 was poised to open at a record high with futures up 0.1pc. Futures on the tech-heavy Nasdaq rose 0.2pc as the sector continues its recovery from last week's selloff.
For now, all eyes are on the Fed.
The widely-expected quarter-point interest rate hike will take the Fed funds target rate above 1pc for the first time since the immediate aftermath of the collapse of Lehman Brothers in 2008.
Market participants' focus will be on signals on the frequency of further hikes and how the Fed plans to unwind its huge Treasury bond stockpile over the years ahead.
The US central bank was scheduled to release its decision at 6pm Irish time on Wednesday with a news conference to follow from Chair Janet Yellen.
"With financial conditions remaining supportive ... and US financials breaking higher, the Fed may see little reason to moderate its rate hike projections when meeting today," strategists at Morgan Stanley said in a note to clients.
The US bank expects the dollar to gain 2pc against major currencies over the next few weeks.
On Wednesday, the dollar index barely budged as slightly firmer moves against the euro and yen were offset by losses against the commodity bloc of currencies, such as the Australian and Canadian dollars.
Worries about the pace of global growth and weakness in markets for the commodities they produce drove a 5pc slide in the values of both Australia's and Canada's dollars between March and May.
Relatively upbeat economic data from China and a surge in expectations of higher Canadian interest rates have helped currencies of commodities-related economies.
In the UK, disappointing wage growth data and a report that a deal needed to form a new government could be delayed until next week hurt sterling, which gave up early gains.
The pound had been recovering from its almost 3pc slide since Prime Minister Theresa May unexpectedly lost her parliamentary majority in a national election last Thursday.
Optimism about the eurozone economy continued to underpin European equities. The pan-European STOXX 600 was up 0.6pc, led by industrials and financials.