Fed’s tone could drive the greenback higher across the board if the central bank strikes less dovish rhetoric than expected
Wall Street stocks finished broadly higher overnight though major indexes retreated from intraday highs by the end of the session as investors opted to partial profit-taking ahead of the Federal Reserve decision. The Dow Jones Industrial Average finished flat at 27,995.60, the S&P 500 gained 0.5%, and the Nasdaq Composite finished up 1.2%.
Today in Asia, equities were mixed amid a cautious tone by investors as they awaited the Federal Reserve’s view on the economy at its policy meeting. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.4% higher. While Australia’s S&P/ASX 200 gained over 1%, China’s Shanghai Composite and South Korea’s Kospi edged lower by 0.35% and 0.31%, respectively.
European equities opened in a mixed manner and were trading little changed early on Wednesday. Retail stocks continued to nudge regional markets higher after Zara-owner Inditex returned to a quarterly profit. Inditex said it saw a 74% jump in online sales in the first half. The company’s stocks rallied over 4% on the news.
Meanwhile, the dollar looks stable ahead of the Federal Reserve meeting outcome and the US retail sales data that could affect USD pairs as well. EURUSD failed to break above 1.19 on Tuesday and tries to regain the bullish bias during the early hours in Europe. The further direction in the pair depends on the FOMC’s tone that could drive the greenback higher across the board if the central bank strikes less dovish rhetoric than expected.
Elsewhere, oil prices jumped aggressively, having climbed to nearly one-week highs around $41.50 earlier on Wednesday. The bullish pressure is due to the news from the Gulf of Mexico where the storm Sally picked up its strength and turned to become a category 2 hurricane. Also on the positive side, the API report showed that the US crude oil stockpiles contracted by 9.5 million barrels last week. Now, traders shift focus to the official estimate from the EIA due later today.