Dollar dips before Fed rate decision
The dollar inched down on Wednesday in the run-in to the Federal Reserve’s policy statement later in the day, with an almost 1 percent fall this week showing minimal expectations the Fed will ramp up its forecasts for future rises in interest rates. The Fed is seen as all but certain to raise its main rate by a quarter point to 0.50-0.75 percent. It will be Chair Janet Yellen’s tone, and new forecasts for future rates, that will drive the market response. Talk among traders this week has focussed on the risks of policymakers expressing concern at the dollar’s gains or alternatively ramping up the predicted pace of future rate hikes in response to President-elect Donald Trump’s spending plans. The dollar was just over 0.1 percent down against a basket of currencies in midday trade in Europe. The euro inched up to $1.0645 and the yen rose 0.2 percent to 114.93 to the dollar.
U.K. Employment Declines for First Time in More Than a Year
U.K. employment fell for the first time in more than a year in the three months through October as the labor market showed some signs of weakness. The number of people in work fell by 6,000 to 31.76 million people, the Office for National Statistics said on Wednesday. While the decline was small, and the jobless rate was unchanged at 4.8 percent, the statistics office said the labor market “appears to have flattened off in recent months.” “This is the first genuine disappointment we have seen in the hard data since the Brexit vote,” said Alan Clarke, an economist at Scotiabank in London. “This has been a gradual deterioration” and “is bad news for spending growth next year.”
Japan manufacturers’ mood brightens to one-year high: BOJ tankan
The Bank of Japan "tankan" survey published on Wednesday found companies also maintained their upbeat spending plans, reinforcing market expectations that the central bank will hold off on expanding monetary stimulus in the coming months. Service-sector confidence, however, was unchanged from three months ago as bad weather hurt private consumption, the survey showed, underscoring the fragile and patchy nature of recovery in the world’s third largest economy. The headline index measuring big manufacturers’ business sentiment rose to plus 10 from plus 6 three months ago, the tankan survey showed, matching a median market forecast and hitting the highest level since December 2015.