Markets shift focus to Federal Reserve rate announcement

Sterling stabilized in Asian trade today after falling to a two-month low against the dollar on Tuesday amid ongoing concern about the outcome of the UK’s upcoming June 23 referendum on European Union membership. Some polls have shown momentum shifting toward the “leave” camp, which could disrupt markets and prompt the Bank of England to hold off on potential rate rises.

GBPUSD recovered 0.1 per cent to $1.4134 on Wednesday after a 1.1 per cent drop in the previous session. Focus now turns to UK employment data later today and the Bank of England policy meeting tomorrow.

EURUSD hovered around the key $1.1200 level.

The Federal Reserve concludes a two-day meeting today and all eyes will be on Fed Chair Janet Yellen’s press conference after the rate announcement.

The dollar index, a measure of the US currency against a basket of global peers, was flat at 94.961 today, but had gained 0.6 per cent overnight.

USDJPY bounced higher in Asia to reach 106.30 yen.

Gold, which is sensitive to interest rate expectations, was down 0.1 per cent at $1,284.12 and facing its first decline in six sessions.

Oil markets continued to slide amid the broad global sell-off, and were eyeing their fifth-straight day of declines, which would be the longest losing streak since February. Brent crude, the international benchmark, and West Texas Intermediate, the US marker, were both down 1.6 per cent at $49.05 and $47.73 a barrel, respectively.

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