European Shares Seen Opening Higher Ahead Of US Fed Decision

European Shares Seen Opening Higher Ahead Of US Fed Decision

A hush settled over financial markets on Wednesday as investors waited to hear how often the Federal Reserve might hike USA rates this year, while the currencies of exporting nations were rattled by fears of a full-blown trade war.

A man looks at an electronic stock quotation board outside a brokerage in Tokyo, Japan February 9, 2018.

Investor focus today will turn to Powell's first Federal Open Market Committee meeting as Fed chairman, with close scrutiny of whether monetary policy might become more hawkish under his tenure.

A near 1 per cent drop for Europe's main bourses amid a flurry of gloomy company news and weaker Wall Street futures meant MSCI's main 47-country world stocks index was down for a fifth day running.

"The good news is we must recall why the Fed is tightening policy".

ASIA'S DAY: Hong Kong's Hang Seng index erased earlier gains to fall 0.4 percent to 31,414.52 after rising more than 1 percent earlier in the day.

The 1800 GMT announcement will also be the first under new Fed chair Jerome Powell, analysts note.

Wall Street was on track for a lower opening on Wednesday as traders moved cautiously ahead of an expected Federal Reserve interest rate hike and continuing fallout from Facebook Inc's data privacy breach.

Speaking at an investor conference, Deutsche CFO James von Moltke said he expected a 450 million euro ($552.78 million) headwind for its Corporate and Investment Banking business in the first quarter. Analysts at JPMorgan see a risk the Fed might not only add one more rate rise for this year but for 2019 as well.

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CURRENCIES: The dollar fell to 106.29 yen from 106.53 yen. Milligan said that would continue unless trade skirmishes started impacting the world economy or US growth accelerated further.

Chances of rates going up more than three times this year recently stood at around 40%, compared with 25% a month ago, according to futures market data from CME Group.

Any nod to four hikes would normally be considered as bullish for the US dollar, yet the currency has shown scant correlation to interest rates in recent months, falling even as policy tightened.

A major overhang for financial markets is the specter of a global trade war.

Investors were also spooked by signs of a brewing global trade war after the Wall Street Journal reported that China was planning counter-measures against USA trade tariffs.

The defensiveness came as fears of a global trade war triggered by US President Donald Trump's imposition of tariffs on steel and aluminum imports cast a cloud over a two-day G20 meeting in Buenos Aires this week.

The currencies of export-heavy nations such as the Australian, New Zealand and Canadian dollars were on the defensive after being knocked down to multi-month lows, while most emerging currencies were also marked lower. The Canadian dollar CAD=D4 held at $1.3029 from Monday's low of $1.3124, a level not seen since mid-2017.

The greenback was last up 0.35 percent, at 106.45 yen after touching a almost one-week peak at 106.60 yen.

Fears of a trade war have also weighed on commodity prices, though tensions in the Middle East supported oil, lifting Brent futures LCOc1 nearly half a percent.

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