Market players will keep a close eye on the Fed’s 2-day meeting that will kick off later today. Meanwhile, Oil prices rose to their highest level in more than 2-years. Bitcoin was little changed as the hype is currently winding down. Here are the top things to know for today’s trading in global financial markets.
1. Fed kicks off 2-day meeting
The Federal Reserve kicks off its two-day monetary policy meeting on Tuesday and is widely expected to raise the fed funds target range by a quarter point at the conclusion a day later at 19:00 GMT. Fed fund futures fully price in the increase to a range between 1.25%-1.50%.
In that sense, markets will play close to attention to Fed chair Janet Yellen’s press conference 30 minutes after the release of the Fed's statement, as investors look for fresh clues on the likely trajectory of monetary policy in the months ahead.
The U.S. central bank will also release its latest forecasts for economic growth and interest rates, known as the "dot-plot". The Fed has forecast three rate rises for next year, and it is expected to keep its outlook about the same even though the market has been skeptical it will hike as much as it expects.
The dollar showed cautious trade on Tuesday as market participants waited for the big event. Later on Tuesday, investors will also digest factory gate prices out at 13:30 GMT.
2. Oil prices big jump
Brent crude futures, the international benchmark for oil prices, passed the $65 mark on Tuesday to hit their highest level since June 2015 as a shutdown of a North Sea pipeline raised concerns of a supply shortage.
The UK's Forties oil pipeline, the country's largest at a capacity of 450,000 barrels per day (bpd), shut down on Monday after cracks were revealed.
The pipeline carries about 40% of UK North Sea crude oil, Britain’s largest capacity transporting about 450,000 barrels a day. The news sent the London barrel soaring to an intraday high of $65.70.
3. Global stocks takes a breather
Wall Street managed to shrug off a terror incident in New York city’s Times Square with the S&P and Dow closing at new record highs. But U.S. futures pointed to a cautious open on Tuesday as traders opted to refrain from bigger moves higher ahead at the start of the Fed’s two-day meeting.
European equities showed cautious gains as market participants prepared for local monetary decisions from both the European Central Bank and the Bank of England on Thursday.
Earlier, Asian shares took a small step back gaining for three straight sessions, with markets consolidating in the hope an upswing in global growth could outlast a likely hike in U.S. interest rates this week.
4. Bitcoin futures pull back
CBOE Bitcoin futures pulled back on its second full day of trading Tuesday as the hype appeared to momentarily die down and volume on the January contract eased with less than 300 contracts traded so far compared to nearly 4,000 on the first day.
Meanwhile, on the U.S.-based Bitfinex exchange, the underlying Bitcoin was also taking a breather, nearly unchanged at $16,766.0, by 11:11 GMT after having risen as high as $17,443.0 a day earlier.
