Powell's Fed

A hush settled over financial markets on Wednesday as investors counted down to a likely hike in U.S. interest rates and guidance on how many more to expect this year, while trade war fears kept export nations’ currencies on edge. Markets are convinced the Federal Reserve will announce a quarter point hike at 1800 GMT, but are less sure if it will signal three or four for the year as a whole.

The Fed has raised rates five times since it began tightening policy in late 2015. Yet the dollar has not really responded, ending 2017 down about 10 percent against a basket of currencies.

The dollar was lower against a currency basket on Wednesday as investors awaited the conclusion of the Federal Reserve’s meeting later in the day, when it was expected to announce its first-rate hike of the year.

EURUSD was higher against the dollar rising 0.33% to 1.2290. Ahead of the latest UK employment report later in the day, GBPUSD also higher rising 0.23% to 1.4045. USDJPY traded lower, sliding to 0.21% 106.25. The Australian dollar remained under pressure after falling to three-month lows overnight amid concerns that China may be hit by U.S. sanctions. China is a major destination for Australian exports.

In commodities US Oil prices were hovering at multi-week highs 63.66 as potential supply disruptions due to tensions in the Middle-East continued to support, as well as upbeat U.S. stockpile data.UK Brent Oil added 11 cents or about 0.18% to 67.55 a barrel, after hitting a two-week peak of 67.88 in the previous session. The commodity was also boosted by speculation the U.S. could reimpose sanctions on Iran, as Saudi Arabia’s Crown Prince Mohammed bin Salman arrived in to Washington for a state visit. Gold prices moved higher on Wednesday, as sentiment on the greenback weakened ahead of the Federal Reserve monetary policy decision , up to 0.21% at 1317.

The economic calendar comes with major economic events with high impact which should provide moderate to high volatility, having two central banks interest rate decisions, the most anticipated one being the Fed interest rate decision, as it will be the first interest rate decision with the new chair, but there is also one from the Reserve Bank of New Zealand, and important fundamental data on the economy of UK. The main economic events for today are Fed Interest Rate Decision, FOMC Economic Projections, Fed Press Conference. Earlier in the European Session we have the ECB Non-Monetary Policy Meeting and UK Average Earnings data.