How the Euro Could Defy Analysts and Options Market Ahead of Fed By Bloomberg



(Bloomberg) — Euro bulls may be looking at a longer wait before they can break free, with a compelling case that the shared currency may head lower into next week’s Federal Reserve monetary policy decision.

It comes in defiance of consensus views among analysts for the euro to rebound, an expectation also reflected by current pricing in the options market. The common currency slipped to a seven-week low of $1.1026 on Friday, at a time when the median estimate of analysts in a Bloomberg survey calls for a move to $1.1400 by end-June and sentiment through options remains bullish for the common currency. That’s turned the currency’s charts bearish in the short-term and may leave long positions looking exposed.

The euro failed to gain traction even after euro-area composite PMI data offered pockets of promise and the European Central Bank warned investors not to assume that policy is on autopilot mode. Momentum selling emerged earlier when the Governing Council’s meeting on Thursday didn’t offer signs that it was looking to tighten monetary policy soon.

Volatility in the euro fell to fresh record lows this week, a pattern that supports the case of it being used as a funding currency of choice for carry trades. That came as Europe became the focus of global trade relations, after U.S. Commerce Secretary Wilbur Ross said tariffs on auto imports from the European Union remained under consideration.

The main check point for the market next week is Wednesday’s Fed rate call. Any rebound for the euro may depend on U.S. monetary policy rhetoric sounding more-dovish-than expected. A strong aversion to riskier trades and the ongoing dominance of tight ranges in the spot market could also help.

But don’t forget that the Fed isn’t expected to cut interest rates any time soon and the hurdle remains high for officials to sound outright dovish as the latest data have positively surprised the market, undermining the chances for a euro boost. That leaves the shared currency’s bulls looking for traction elsewhere. Market jitters over the economic effects of a China-originated virus could prompt outflows out of emerging markets and back to the euro area.

Euro bulls’ best chance may be with short-term traders who look to fade dips as expectations for a large move next month stand at multi-year lows. Technically, the euro remains in a bearish trajectory below its 55-daily moving average, currently at $1.1095, and may target a move below $1.0950, which could satisfy the projection of a head and shoulders pattern that was completed this week.

A lower volatility environment has pressured the euro in the past two years, yet at the moment it is just what could offer some short-term relief.

What to Watch:

  • Chinese New Year Saturday; Italy holds local elections in the region of Emilia-Romagna the following day in the latest challenge for the ruling coalition
  • Fed Chairman Jerome Powell holds a news conference after the FOMC rate decision on Jan. 29; highly-anticipated Bank of England policy decision comes the next day; Governor Mark Carney to speak
  • Policy maker speeches coming up include Bank of Canada’s Deputy Governor Paul Beaudry and Riksbank Governor Stefan Ingves
  • Economic releases include euro area GDP and CPI; U.S. personal spending, GDP; Sweden retail sales and Norway unemployment; see data calendar
  • NOTE: Vassilis Karamanis is an FX and rates strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Fed Plans Shift From Writing Rules to Watching How Banks Behave By Bloomberg


© Reuters. Fed Plans Shift From Writing Rules to Watching How Banks Behave

(Bloomberg) — The Federal Reserve is shifting its focus from writing and revising rules aimed at limiting risk in the banking system to a concentration on how lenders interpret the restrictions, the agency’s supervision chief said Friday.

Having finished the bulk of its work on major rules, the Fed can now devote more attention to behind-the-scenes interactions between bankers and their government overseers, Vice Chairman Randal Quarles said at a meeting of industry lawyers in Washington. He said the central bank will be more transparent about its supervisory work, sharing guidance documents with Congress and seeking public comment on them as it does with new rules.

“Supervisors promote good risk management and thus help banks preemptively avert excessive risk-taking that would be costly and inefficient to correct after the fact,” Quarles said. “Where banks fall materially out of compliance with a regulatory framework or act in a manner that poses a threat to their safety and soundness, supervisors can act rapidly to address the failures.”

Financial-industry regulators appointed by President Donald Trump have overhauled restrictions put in place after the 2008 credit crisis, and they’ve blunted the sting of some strictures that Wall Street hated most. The Fed last year completed some of those items and finished a major project to tailor regulations to banks based on their size, complexity and business models.

Quarles said the new emphasis on supervision and the proposed incremental changes are meant to “increase transparency, accountability and fairness” without jeopardizing the strength of the financial system.

In another potential change, he said the Fed could also clarify how banks are added to list of complex institutions overseen by the Large Institution Supervision Coordinating Committee. That’s meaningful because those dozen lenders including JPMorgan Chase (NYSE:) & Co., Bank of America Corp (NYSE:)., Deutsche Bank AG (DE:) and Credit Suisse (SIX:) Group AG are compared with their peers when evaluated by supervisors. Quarles said he wants to move the four foreign banks — Deutsche Bank, Credit Suisse, UBS Group AG and Barclays (LON:) Bank Plc — to a lower category.

“This change in supervisory portfolio would have no effect on the regulatory capital or liquidity requirements that currently apply,” Quarles said Friday at a meeting of the American Bar Association’s banking law group. The firms have shrunk their U.S. footprints, he said, and this move would align with other recent changes in their regulatory requirements.

He also said he favors codifying the Fed’s assurances that it won’t treat guidance — such as the 2013 directives on leveraged lending — as enforceable rules.

The vice chairman said the Fed intends to be clearer with the banks about what it wants and why, opening more two-way communication with the industry. His agency has earned a reputation for opacity, rarely revealing its evaluation methods or sharing specifics about its expectations, but Quarles’ tenure has been marked by a relaxation of the secrecy around the stress tests introduced after the 2008 meltdown to ensure the banks can weather another crisis.

Quarles didn’t address the status of some pending rules. The Fed is still working with other agencies on a new proposal to govern Volcker Rule limits on banks’ investments, and it’s also completing work on significant measures dealing with bank liquidity and leverage.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Fed will continue repo offerings into February, reducing term operations By Reuters


© Reuters. FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington

By Jonnelle Marte

(Reuters) – The Federal Reserve Bank of New York said on Tuesday it will continue to inject liquidity into the overnight lending markets for cash until at least mid-February while slightly reducing offerings on longer term loans.The U.S. central bank will modestly pare down the overall scale of the operations after boosting liquidity offerings at year-end, when financial firms and analysts feared a possible shortage of cash. But the new schedule shows it will stay involved in daily markets for at least another month as it works to permanently increase reserves and keep short rates stable.

“They’re going to err on the side of offering more than the market needs rather than paring back preemptively,” said Zachary Griffiths, a rate strategist for Wells Fargo (NYSE:) Securities.

The New York Fed will continue to offer up to $120 billion in daily operations in the market for repurchase agreements, or repo. In February, it will reduce the maximum offerings for longer term loans, which last two weeks, to $30 billion from the current cap of $35 billion.

The New York Fed also said Tuesday it will keep purchasing $60 billion a month in short-term Treasury bills, the same pace set in mid-October when it began growing the balance sheet to permanently increase reserve levels in the banking system.

The update on the Fed’s liquidity operations came as financial firms are showing greater demand for short-term cash loans from the Fed, following a drop at the end of the year.

The central bank’s offering for two-week loans in the repo market was oversubscribed Tuesday morning for the second time since Jan. 7. Firms requested $43 billion in loans on Tuesday, greater than the $35 billion maximum.

The year-end liquidity crunch some experts had anticipated never materialized, and firms took up only a small portion of the repo offerings made available by the central bank in the final days of December. But financial firms now want to know what the Fed’s exit strategy will be after it became a dominant player in the repo market over a four-month period.

The Fed began intervening in the overnight lending markets for cash in mid-September, when a liquidity shortage pushed short-term borrowing costs up to 10%, or more than four times the top of the federal funds target range at the time. The central bank started growing the balance sheet a month later, with the goal of raising reserves to a level where the daily market operations are no longer needed.

Minutes from the Fed’s December policy meeting showed staffers expected they might gradually reduce repo operations after mid-January as it grew the level of reserves. Officials also said the Fed may need to offer some repo support through at least April, when tax payments could lower reserve levels.

Some strategists wonder if the recent rise in demand for the Fed’s repo offerings signals a need for liquidity or if firms are simply taking advantage of low-cost financing from the Fed.

“They’re offering cheaper liquidity than the market so why would dealers not go to the Fed for that funding?” said Blake Gwinn, head of front-end rates strategies for NatWest Markets.

One way to wean firms away from the Fed’s offerings could be to raise the rate charged slightly, Gwinn said. That could give dealers the incentive to turn to the private market for funding, he said, adding that they could return to the Fed if there was a shortage.

“The Fed should really start communicating and letting people know this is not a permanent state of affairs,” Gwinn said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Dollar Flat as Weaker Jobs Report Should Keep Fed Sidelined By Investing.com


© Reuters.

Investing.com – The U.S. dollar was flat on Friday as data showing the U.S. economy created fewer-than-expected jobs in December did little to suggest the Federal Reserve needs to move off the sidelines.

The , which measures the green against a trade-weighted basket of six major currencies, fell by 0.07% to 97.09.

The U.S. created jobs last month, undershooting economists’ forecast of 164,000.

The remained unchanged at 3.5%, but wage growth slowed to a pace of 0.1% last month, missing expectations of 0.3%.

Following the weaker-than-expected jobs report, BMO said there was little reason for the Fed to move from the sidelines as the trend of steady job growth, low joblessness and still-subdued wage inflation continued.

and , meanwhile, were also largely flat falling, 0.07% and rising 0.13% respectively.

Cable took a drubbing earlier this week and remains under pressure after Bank of England hinted at more monetary stimulus.

“We estimate that a Bank of England-prompted 50-basis-point widening in the one-year/one-year rate differential might knock 180 pips off cable,” ING said in a note.

was unchanged at C$1.305 as a firmer from Canada eased concerns about the labor market following November’s, underpinning the loonie.

The Canada jobs report trimmed expectations that the Bank of Canada will cut this year, but RBC said it believes the central bank will still be forced to act to support the economy.

“These were the jobs numbers we were all hoping for following November’s ugly employment report,” RBC said. “But these numbers on their own won’t necessarily keep the Bank of Canada on the sidelines.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Fed policymakers broadly see eye to eye on 2020 outlook


SAN DIEGO/BALTIMORE (Reuters) – Federal Reserve policymakers who last year were frequently at odds over where to set U.S. borrowing costs opened 2020 telegraphing confidence in the state of the economy and signaling broad agreement that monetary policy is right where it should be.

FILE PHOTO: Federal Reserve Bank of Richmond President Thomas Barkin poses during a break at a Dallas Fed conference on technology in Dallas, Texas, U.S., May 23, 2019. REUTERS/Ann Saphir

In their first remarks in the new year, heads of several regional Fed banks noted a strong job market, robust consumer spending and a rising optimism for a resolution to the trade tensions that had nicked growth in the second half of 2019.

And after cutting interest rates three times last year to bring the Fed’s target to a range of 1.5% to 1.75% and ensure global headwinds didn’t short-circuit the longest U.S. economic expansion in history, “I think most of us think that we are well-calibrated now,” Cleveland Federal Reserve Bank President Loretta Mester said in an interview on the sidelines of an economics conference in San Diego.

Based on forecasts of her fellow policymakers on the Fed’s rate-setting committee, she said, “the committee thinks a flat path (for interest rates)… is appropriate.”

Mester had been among a handful of Fed policymakers who argued last year that the U.S. economy did not need lower rates to continue to grow.

And while she and others noted the outlook could change if an outside shock like this week’s dramatic escalation of tensions between the United States and Iran knocks the U.S. economy off its current trajectory, most appear happy to leave rates where they are.

“The economy is still healthy,” Richmond Fed President Thomas Barkin said earlier Friday in Baltimore. Like Mester, Barkin had been skeptical of last year’s rate cuts. “I’m encouraged by recent jobs reports and the pace of holiday spending,” with last year’s round of three Fed rate cuts helping prop up demand for homes, cars and other big-ticket consumer items, Barkin added.

It was an assessment also shared by Chicago Federal Reserve Bank President Charles Evans who unlike Barkin and Mester supported last year’s interest-rate cuts. In a CNBC interview, Evans predicted U.S. economic growth this year would chug along at a rate of 2% to 2.25%, roughly the pace of expansion in the second half of last year.

The clutch of comments on Friday shows how comfortable most Fed policymakers are that the 2019 rate cuts will prove a sufficient buffer against the risks that spurred them into providing the stimulus, including slowing global growth and escalating trade tensions.

Indeed, after a fractious year for the Fed, which saw split votes on each of the rate cuts, officials agreed unanimously in their final policy meeting of 2019 to leave rates unchanged. Moreover, they agreed rates were likely to stay on hold for “a time” as long as the economy remains on track, minutes of the Dec. 10-11 meeting released on Friday showed.

“Participants judged that it would be appropriate to maintain the target range for the federal funds rate,” according to the minutes.

STILL SOME SIMMERING DIVISIONS

Even with their newfound consensus over the outlook for rates and the economy, there were some signs of tensions that could divide Fed policymakers as the year progresses.

Inflation has been running below the Fed’s 2% target, and that is worrying some policymakers including San Francisco Fed President Mary Daly.

“We are seeing some early evidence that long run inflation expectations are slipping,” Daly said at the annual American Economics Association meeting in San Diego. “We don’t have a really good understanding of why it’s been so difficult to get inflation back up.

Speaking at the same panel, Dallas Fed bank chief Robert Kaplan downplayed the danger of low inflation, noting that it is only a few tenths of a percentage point below the Fed’s target. At the same time he noted his worry that low rates could feed excesses in the financial system.

Mester, in her interview, took a similar stance. “I don’t see anything right now that suggests to me inflation is going to run away on the top side,” she said. “I don’t see it running too low either.”

(This story was refiled to add missing name in eighth paragraph.)

Additional reporting by Jason Lange in Washington; Ann Saphir and Howard Schneider in San Diego, and Kanishka Singh in Bengaluru; Writing by Dan Burns, Howard Schneider, Ann Saphir; Editing by Andrea Ricci, Paul Simao and Sandra Maler



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Oilfield service firms have a bearish outlook for 2020: Dallas Fed By Reuters


© Reuters. An oil pump at sunrise near Midland, Texas

(Reuters) – With their business outlook worsening, about half of oil field service firms plan to cut spending in 2020, the Federal Reserve Bank of Dallas said on Friday in its quarterly energy survey.

Oil and gas activity and employment dipped in the fourth quarter in the Dallas Fed region, which includes the largest U.S. shale field, the Permian Basin in Texas and New Mexico.

U.S. oil prices have hovered below $60 a barrel for most of the year, prompting many energy firms to cut staff and reduce budgets, even as major oil exporting countries have curbed production. About 36% of oil and gas producers plan to cut budgets next year, the survey said.

U.S. oil has rebounded to $61.72, up about 6% from a month ago, but oil producers and their service firms, which provide equipment and oil field crews, are planning their budgets for oil prices between $54 and $55 per barrel in 2020, according to the survey.

“Continued weak oil prices and high costs are squeezing my margins,” one survey respondent said. “It is very difficult to find any projects that make sense economically.”

The report also asked oil and gas firms about flaring and venting in the Permian Basin, which reached a new all-time high in the third quarter, averaging more than 750 million cubic feet per day (MMcfd), according to Rystad Energy.

Pipeline takeaway capacity and a lack of gathering and processing plants were cited as the top reasons for flaring, according to the Dallas Fed survey.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



U.S. Fed buys $825 million of mortgage bonds, sells none By Reuters



NEW YORK, Dec 26 (Reuters) – The Federal Reserve bought $825 million of agency mortgage-backed securities in the week

from Dec. 19 to Dec. 24, compared with $1.806 billion purchased the previous week, the New York Federal Reserve Bank said on Thursday.

In a move to help the housing market begun in October 2011, the U.S. central bank has been using funds from principal payments

on the agency debt and agency mortgage-backed securities, or MBS, it holds to reinvest in agency MBS.

The New York Fed said on its website the Fed sold no mortgage securities guaranteed by Fannie Mae (OB:),

Freddie Mac (OB:) or the Government National Mortgage Association, or Ginnie Mae,

in the latest week. It sold $200 million the prior week.

((New York Treasury Desk +1-646-223-6300))

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Fed policymakers see U.S. economy on good footing By Reuters


© Reuters. Federal Reserve Vice Chair Richard Clarida reacts as he holds his phone during the three-day “Challenges for Monetary Policy” conference in Jackson Hole

By Jonnelle Marte and Lindsay Dunsmuir

(Reuters) – The U.S. economy is doing well and looks set to stay that way next year, two top Federal Reserve policymakers said on Friday, remarks that suggest they are content to leave interest rates where they are.

“I think the economy is in a good place. U.S Federal Reserve Vice Chair Richard Clarida said in an interview with Fox Business Network, adding that the consumer has never been in better shape. “We have the strongest labor market in 50 years, we have low and stable inflation, we have solid growth and our baseline outlook for the economy is more of the same in 2020.”

Speaking to students and faculty earlier in the day at the Borough of Manhattan Community College, New York Fed President John Williams (NYSE:) summed it up this way: “The economy is performing about as well as we have seen in decades.”

Williams and Clarida work closely with Fed Chair Jerome Powell, who on Wednesday announced the U.S. central bank’s well-telegraphed decision to hold interest rates steady in a range of 1.5% to 1.75%, and signaled borrowing costs would remain there for the foreseeable future.

The Fed cut rates three times from July to October in a mini-easing cycle, designed to sustain the U.S. economic expansion amid slowing global growth and a drop in business investment caused by uncertainty amid the 17-month long U.S.-China trade war.

On Friday the world’s two largest economies announcing a Phase 1 agreement that reduces some U.S. tariffs in exchange for increased Chinese purchases of American farm goods.

“Any resolution of that uncertainty, assuming it’s a good deal, is obviously a positive for the economic outlook,” Clarida said. He added, though, that trade was just a number of risks the Fed will monitor.

“This is obviously a negotiation; it looks like it’s going in a positive direction,” Clarida said. “But … global developments more broadly have been something we’ve been monitoring. You’ve had a global slowdown this year, emerging markets have been slowing down, there are muted inflation pressures. So it’s not just any one thing that we are focusing on.”

Williams, for his part, said he expects the U.S. economy to grow about 2% annually over the next couple of years.

Fed officials are working to keep inflation, which is short of the central bank’s 2% target, from getting too low to give policymakers more room for adjusting monetary policy.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Dollar Near 4-Month Lows after Dovish Fed; ECB, UK Election in Focus By Investing.com


© Reuters.

Investing.com – The dollar was hovering near four-month lows on Thursday, nursing its steepest losses in weeks after the Federal Reserve forecast that it would keep interest rates on hold through 2020.

Investors also remained cautious ahead of Sunday’s deadline for the next round of U.S. tariffs on Chinese imports to take effect, and ahead of a European Central Bank meeting and the UK election on Thursday.

The greenback hit its lowest in more than a month against the after the Fed meeting and was holding just above that level at 1.1126 by 04:24 AM ET (09:24 GMT).

Against a basket of currencies, the recovered somewhat from an overnight four-month low but remained subdued at 97.09.

The dollar ticked up to 108.61 per .

“The Fed was not as optimistic as people thought, and that is consistent with a lower U.S. dollar and the fall in bond yields that we saw,” said Commonwealth Bank of Australia analyst Joe Capurso.

Fed Chairman Jerome Powell said the economic outlook for the U.S. was favorable as the central bank announced its decision to hold steady, but said a significant, persistent rise in inflation would be needed to hike rates.

New economic projections showed 13 of 17 Fed policymakers foresee no change in interest rates until at least 2021.

Investors were turning their attention to the looming trade deadline, Christine Lagarde’s first meeting at the helm of the , and voting in the British election.

U.S. President Donald Trump is expected to meet with top trade advisers later Thursday to discuss planned Dec. 15 tariffs on some $160 billion in Chinese goods, Reuters reported.

A decision to move ahead with the tariffs could roil financial markets and scuttle U.S.-China talks to end the 17-month-long trade war between the world’s two largest economies.

With ECB policy expected to remain unchanged, focus is likely to shift to Lagarde’s communication style as investors search for clues about the future of stimulus and the policy review.

The weaker dollar helped the edge up to 1.3202.

Sterling is priced for a Conservative majority that could control parliament and lead Britain out of the European Union at the end of January, and anything short of that could prompt a slide.

Voting in the UK elections ends at 2200 GMT, with exit polls and early results likely to flow after that and traders expecting an outcome as early as 0300 GMT on Friday.

“Prices should jump around…with likely sharp reactions as each constituency release their results,” said Chris Weston, head of research at Melbourne brokerage Pepperstone.

“We are watching GBP/USD overnight implied volatility as it rolls over, and there is no doubt it will be sky-high, with traders pricing some punchy moves in the pound. One for the bravest of souls.”

–Reuters contributed to this report

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Traders keep bets on extended Fed policy pause


(Reuters) – U.S. short-term interest rate futures were slightly lower Wednesday after the Federal Reserve held interest rates steady and signaled most policymakers see little chance they will need to tweak borrowing costs until after next year’s presidential election.

The Fed had been widely expected to keep rates in the range of 1.5% to 1.75% at its two-day meeting that wrapped up Wednesday, its last policy meeting of the year. Projections that accompanied the announcement showed no policymakers thought lower rates would be appropriate next year; the majority expected no change to rates in 2020, and just four expect a single rate hike.

After the report, bets placed in futures contracts tied to the Fed’s policy rate continued to reflect expectations that the U.S. central bank will leave rates where they are until next September, when it will, in the view of traders, deliver another rate cut to shore up economic growth.

Reporting by Ann Saphir; editing by Jonathan Oatis



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