Fed rate hike remains uncertain after Harvey, Irma

Fed rate hike remains uncertain after Harvey, Irma

Fed rate hike remains uncertain after Harvey, Irma

The New Zealand dollar retreated from early highs against other major currencies in the Asian session on Wednesday, as Asian stock markets traded lower. There was a chance that the Fed would appear more dovish with respect to the prospects for tightening in 2018 and 2019 but would likely stay the course for a December hike.

Dow Jones Industrial Average futures were up 0.08%, S&P 500 futures added 0.08%, and Nasdaq futures increased 0.1%.

The stronger dollar against the yen buoyed exporters on Tokyo's Nikkei, with the index up 1.5 percent by the break as traders also returned from a three-day break to play catch-up with Monday's global rally. The incoming data from the U.S. has been mixed over the past couple of weeks and not strong enough for the Fed to lean this way or the other but with the inflation holding steady, though below target, the Fed would not want to shut the door on the rate hike just yet. Forecasters expect the Fed to leave interest rates unchanged and stick to plans to raise rates in December.

The US central bank is expected to announce when it will begin paring its bond holdings, and while a September interest rate increase is not expected, investors will closely study Fed chair Janet Yellen's views on inflation for clues whether the Fed will raise rates in December.

Tuesday marks the start of the USA central bank's two-day meeting.

On Tuesday, The US President, Donald Trump, worsened his altercation with North Korea across its nuclear encounter, sending intimidation that'll "totally destroy" the country and making a mockery of its leader, Kim Jong Un calling him as a "rocket man".

"The primary reason US yields are creeping up is after thinking about it clearly, the market has decided that the Fed is unlikely to change the December 2017 dot - still saying they expect one more rate hike in 2017", said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in NY.

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Earlier on Tuesday, the yen hit a 21-month trough versus the euro at 134.15 yen, while the Swiss franc hit 1.1563 francs, its lowest against it since January 2015.

BONDS: Bond prices rose.

Higher U.S. yields bolstered the greenback, with the benchmark 10-year note yield notching a one-month high of 2.237 percent overnight.

According to data published by the Eurozone's statistics body Eurostat, showed that the bloc's CPI figures jumped from 1.3% to 1.5% in August its highest rate since April.

In commodities, oil prices rose after Iraq's oil minister said OPEC and other crude producers were considering extending or even deepening a supply cut to curb a global glut, while a report showed a smaller-than-expected increase in USA inventories.

The most influential movers on the index also included Potash Corp of Saskatchewan (POT.TO), which gained 3.5 percent to C$23.59, and Agrium Inc (AGU.TO), which was up 3.6 percent to C$132.65. Brent crude slipped 0.1 percent to $55.42, not far from an nearly five-month high of $55.99 marked on Thursday.

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