World markets will be closely watching the Fed’s policy decision later today.
Here are 4 tips for today's trading. This will help you decide where you should invest and what to look for:
1. Fed set for rate hike
With the Federal Reserve (Fed) widely expected to raise interest rates by a quarter point to a range between 1.0%-1.25%, investors' focus will be on any fresh hints on the pace of further tightening in the months to come and next year.
At the same time, market players will also pay close attention to details of the Fed's plan to reduce its $4.5 trillion balance sheet later this year.
Most experts are looking to Fed chair Janet Yellen’s press conference in the hopes that she will give clarity on whether the U.S. central bank plans its next move to be another rate hike or the beginning of policy normalization.
2. Economics updates
Though the market spotlight is focused on the Fed for Wednesday’s session, two key data points will be released at 12:30 GMT that both investors and policymakers will be watching closely.
Most experts believed that Wednesday’s consumer price index (CPI) data would be unlikely to stay the Fed’s hand with expectations pointing to an easing to a 2.0% annual increase in the headline number and core inflation remaining steady at 1.9%.
Retail sales will also be on the radar as investors look to gauge the strength of the American consumer.
Ahead of the data and will all eyes on the Fed, the dollar showed little movement in relatively calm currency markets. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, inched up just 0.04% at 97.01 by 10:04 GMT.
3. Oil prices plunge
Oil prices moved lower on Wednesday, declining for the first time in three sessions, as investors looked ahead to weekly data from the U.S. on stockpiles of crude and refined products.
After markets closed Tuesday, the American Petroleum Institute (API) said that U.S. oil inventories rose by 2.753 million barrels, well above the 2.739 million barrels decline expected.
There are often sharp divergences between the API numbers and official data out later on Wednesday.
The U.S. Energy Information Administration will release its official weekly oil supplies report at 14:30 GMT, amid expectations for a draw of around 2.7 million barrels.
4. U.K. trouble continues
The U.K. released data that saw unemployment remain at a 42-year low on Wednesday, but real wage increases continued to ease, causing concern over Britons’ purchasing power as the gap widens between earnings and inflation.
The disappointing increase in average earnings excluding bonuses arrived ahead of the Bank of England’s (BoE) policy decision on Thursday.
The BoE is facing increasingly difficult policy decisions as inflation continues to rise but political uncertainty surrounding Brexit negotiations increases downside risks.
Britain entered a sixth day of political limbo on Wednesday with Prime Minister Theresa May yet to seal a deal to prop up her minority government and facing calls to soften her stance on Brexit days before negotiations on leaving the EU begin.
