Markets players will focus on Central Banks policy announcements today to see where the global economy is headed. Meanwhile, global stocks are mixed, digesting yesterday’s Fed rate hike and its outlook for 2018. The Dollar was dropping after the announcement but recovered in early trading this morning. Here’s all you need to know for today’s trading.
1. Dollar steadies after falling
The dollar stabilized after the Federal Reserve raised interest rates as expected, but left its rate-hike projection for 2018 unchanged due to concerns over the sluggish inflation outlook.
The U.S. dollar index was little changed at 93.42, after falling 0.7% from a one-month high on Wednesday.
The Fed raised interest rates for a third time this year and indicated that it would stay on a similar path next year, disappointing some dollar bulls who had speculated the U.S. central bank could raise its interest rate projection for next year to four rate hikes.
The central bank also said it expected inflation to remain below its target for another year, tempering expectations for an accelerated pace of rate hikes.
Looking ahead, the Commerce Department will publish data on retail sales for November at 13:30 GMT. The consensus forecast is that the report will show retail sales increased 0.3% last month. Core sales are forecast to gain 0.7%.
2. Global stocks mixed
Global stock markets were mixed, as investors reacted to the Federal Reserve's decision to raise interest rates, while awaiting policy decisions from the European Central Bank and Bank of England.
Most Asian-Pacific markets closed slightly lower, as a decline in the region's financial stocks weighed.
In Europe, the majority of the continent's bourses were in negative territory in mid-morning trade, as financial sectors caught the cold from U.S. and Asian trading.
On Wall Street, U.S. stock futures pointed to a slightly higher open. The Dow and the Nasdaq ended higher on Wednesday, but the S&P could not sustain gains in choppy trading following the release of the Fed's statement.
3. ECB’s policy meeting
The European Central Bank's latest interest rate decision is due at 12:45 GMT, with no major policy changes expected.
Most of the focus will be on President Mario Draghi's press conference 45 minutes after the announcement, where he is most likely to reiterate his pledge to support the economy and maintain super-low borrowing costs in the months ahead.
The ECB will also unveil initial 2020 inflation projections, which will likely show price growth at or just below target, rising only gradually over the coming three years, lending support to the bank's decision to withdraw monetary stimulus only slowly.
The euro was little changed against the dollar, with EUR/USD at 1.1830, having advanced 0.7% the previous day.
4. Bank of England meeting
The Bank of England will announce its rate decision at 12:00 GMT, with analysts expecting no major change in policy, as policymakers grapple with uncertainty over Brexit, low wage growth and weak productivity, which are all weighing on the economy.
Last month, the BoE added back the 25 basis points it took off borrowing costs in the aftermath of the Brexit vote, taking interest rates back to 0.50%, but said it sees only gradual rises ahead as Britain prepares to leave the European Union.
In addition to the BoE, politics is likely to be at the back of investors' minds, as they keep an ear out for any news regarding the Brexit negotiations. British Prime Minister Theresa May will urge European Union leaders to approve an agreement to move Brexit talks on to a second phase in an EU leaders' summit in Brussels on Thursday.
The Pound edged higher, with GBP/USD rising 0.2% to 1.3445.
