The central bank is not expected to change the fed funds rate
US stocks finished slightly higher on Monday to settle just above the flat line as investors were indecisive ahead of the Fed’s two-day meeting that concludes on Wednesday. The central bank is not expected to change the fed funds rate from the current level of 5.25%-5.5%, so their rate and economic projections will be in focus after a stronger-than- expected inflation data for August. For the November meeting, markets are giving about one-third odds of a 25-basis-point hike. The S&P 500 inched higher by 0.07%, the Nasdaq Composite added 0.01% and the Dow Jones advanced 0.02%.
In Asia, however, equities slipped amid worries about the Chinese property sector. MSCI’s broadest index of Asia-Pacific shares gave up 0.3%. Japan’s Nikkei tumbled 1.1%, weighted by solid losses for chip-related stocks. Meanwhile, Country Garden recieved approval from creditors to extend repayment on another onshore bond. South Korea’s Kospi edged down 0.3%, Hong Kong’s Hang Seng slipped 0.5%, while the Shanghai Composite fell 0.3%.
European stocks opened mixed-to-lower, with investors looking ahead to the Fed meeting. The pan-European Stoxx 600 index was 0.2% higher in early trading, with retail stocks suffering the biggest losses. On the data front, Eurozone August final CPI came in at +5.2% versus the preliminary estimate of +5.3% y/y. The core inflation arrived at +5.3% versus +5.5% in July, which is a positive sign. US stock index futures are lightly changed after a nearly flat showing in Wall Street overnight.
Meanwhile, the USD index keeps trending slightly lower today, but still holding close to six-month highs while US Treasury yields hovers around multi-year peaks in anticipation of the Fed decision that will set the tone for the greenback later in the week. The DXY is challenging the 105.00 support zone, a decisive break below which would pave the way to deeper losses. EURUSD looks steady below 1.0700 after a two-day bounce, with downside risks persisting while below the key daily SMAs.