With just hours until the highly anticipated central bank decision, traders are still uncertain about the size of the Federal Reserve rate cut. An unexpected rise in U.S. retail sales initially dampened hopes for a 50-basis-point reduction, but futures-implied probabilities are now steady at around 65%.
The dollar is weakening against the yen, while U.S. short-term Treasury yields are rising. Equities are generally down, with Japan being an exception as the market reacts to fluctuations in the yen. European stock futures indicate small losses.
Expectations for Fed easing this year point to two 50 bps cuts and one 25 bps reduction over the remaining policy meetings. Despite a strong U.S. economy, the Fed may still opt for a quarter point cut.
Key data releases include UK CPI and PPI, Euro zone HICP, and Sweden's unemployment rate. The Bank of England will also announce its policy decision on Thursday.
Stay tuned for more updates on market movements and central bank decisions.
Analysis: Traders are eagerly awaiting the Federal Reserve's rate cut decision, which could impact currency, bond, and equity markets. The outcome of the Fed meeting will provide insight into the central bank's stance on the economy and future monetary policy actions. Investors should pay attention to market reactions and adjust their portfolios accordingly based on the Fed's decision.