Global markets edge up ahead of Trump speech, Fed meeting

Andrew Cummings
September 20, 2017

Some banks are expecting the Federal Reserve to announce that QT will begin in October, but the pace will still be a key detail. "The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate", Federal Reserve stated in last meet on 25-26 July 2017.

Traders also focused on the impact that the Fed's expected decision may have on the prices of stocks and other financial assets. Fed Chair Janet Yellen will hold a press conference after the FOMC meeting ends.

The dollar had weakened against the yen ahead of U.S. President Donald Trump's speech before the United Nations General Assembly.

"There's some concern among investors as to how this will work, and how it will affect long-term rates". In his speech, Trump warned that the United States will be forced to "totally destroy" North Korea unless Pyongyang backs down from its nuclear program, but the criticism was not enough to spook investors.

The Bloomberg Dollar Spot index reversed slight gains to fall more than 0.1 percent, with the greenback dropping versus all G-10 peers save the Swiss franc.

The key outside markets on Tuesday morning see the US dollar index weaker.

The Dow Jones industrial average rose 26.82 points, or 0.12 percent, to 22,358.17, the S&P 500 gained 0.89 points, or 0.04 percent, to 2,504.76 and the Nasdaq Composite added 0.33 points, or 0.01 percent, to 6,454.97.

The S&P financial index .SPSY gained 0.8 percent ahead of the Fed statement.

The Fed now holds $4.2 trillion of bonds on its balance sheet.

The pan-European FTSEurofirst 300 index closed up 0.1 percent, while MSCI's gauge of stocks across the globe gained 0.21 percent and hit a record closing high as well.

"Trump is erratic and there have been conflicting signals from people in his administration, but as long as the market is confident the US approach is going to remain diplomatic, the movement will be away from safe havens", said Jane Foley, senior FX strategist at Rabobank in London. The Nikkei 225 had surged almost 2 percent Tuesday to close at 20,299.38.

Benchmark 10-year notes fell 3/32 in price to yield 2.24 percent, up from 2.23 percent late on Monday. USA crude fell 0.2 percent to $49.81 per barrel and Brent was last at $55.11, down 0.25 percent on the day.

In commodity markets, metals shifted lower and oil prices steadied near last week's multi-month highs.

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