The Dollar remains mixed as markets awaiting FOMC rate decision today. The Dollar Index is stuck in tight range below 81.02 for nearly two weeks and is struggling at around 80.6 for the moment. Other financial markets are lacking a clear direction too.
The Dow 30 closed mildly higher by 0.16% at 16808.49 but is stuck in range below 16970.17 record high. Similar picture is seen in S&P 500 as it's staying in range below 1955.55 record high and closed at 1941.99. 30 year yield rose to close at 3.446 overnight but is staying in range below near term resistance of 3.492. The more exciting movement was seen in 10 year yield which closed strongly at 2.655, touching near term resistance of 2.655. In short, the markets will need some stimulus to get a firm direction.
The Fed is widely expected to continue tapering by lowering the monthly asset purchase by another $10b to $35b. The Fed will also release updates to its economic forecasts. Recent lower than expected GDP figure might feed into 2015 outlook and Fed would likely revise down the projections. Recently, the IMF lowered growth forecast for the US this year sharply to 2.0%, down from April's projection of 2.8%. The World Bank also lowered US 2014 growth forecast to 2.1%, down from prior projection of 2.8%. There would likely be no change in the inflation forecasts. A focus is on the post meeting statement's reference to the development in jobs and inflation. But that would likely be unchanged too. So, overall, the FOMC meeting could trigger little reaction to the markets.
Another major focus today is the BoE meeting minutes. The pound has been strong since BoE governor Carney last week said that rate hike could come in earlier than expected. Carney also said this week that the central bank "will not hesitate to take further proportionate and graduated action as warranted" to moderate the housing market. And he warned that and "an environment of low and predictable interest rates could encourage "excessive risk taking in financial markets and in households". However, the tamer than expected inflation reading released yesterday cooled the speculation of rate hike by the end of this year. Today's meeting minutes would provide some hindsight on the policymakers' view on the timing of rate hike.
On the data front, Japan trade deficit came in narrower than expected at JPY -0.86T in May. Australia leading indicator dropped -0.1% in April and Westpac leading index rose 0.1% mom in May. Swiss will release ZEW expectations today. Canada will release wholesale sales. US will release current account.