Dollar dips before Fed announcement

Dollar dips before Fed announcement

London (AFP) – The dollar dipped Wednesday before a key Federal Reserve policy announcement, while stock markets diverged with many indices playing catch-up after May Day closures.

Frankfurt and Paris markets reopened as new data showed growth in the eurozone had slowed in the first quarter this year, adding to fears that the recovery in Europe was losing steam.

Technology stocks were meanwhile mixed after Apple released better-than-expected earnings that soothed worries about iPhone sales.

As trading floors reopened after the Labour Day break, attention was on the Fed’s policy decision later Wednesday.

While the central bank is not expected to lift US interest rates at the latest meeting, traders will study the statement for clues on the pace of hikes expected this year. 

A broadly positive outlook for the US economy, along with easing geopolitical and trade worries, helped to lift the dollar earlier in the week but it eased against main rivals Wednesday.

Wall Street’s three main indices ended mixed Tuesday, with analysts warning that the strong US earnings season could be a high mark for the year.

Apple on Tuesday reported a hefty jump in second-quarter earnings and unveiled a $100-billion share buyback plan, while boss Tim Cook was optimistic about the outlook.

The news soothed recent worries about the iPhone-maker, which is a major customer for suppliers in Asia.

– Iran deal ‘flashpoint’ –

Traders are keeping tabs also on trade developments as a high-level US trade delegation heads to China this week for talks.

The meetings come after US President Donald Trump on Monday decided to extend exemptions for the European Union, Canada and Mexico from steel and aluminium tariffs announced in March.

Attention is on also Trump’s May 12 deadline for deciding on whether to scrap a nuclear deal with Iran.

“The Iran sanctions deal issue has not gone away because what the president does about the deal is still a potential flashpoint,” said Greg McKenna, an analyst at AxiTrader.

“My sense is he’ll renegotiate or seek to. And I’m not sure that’s enough to drive (oil) prices up and through the recent range highs.”

Crude futures traded mixed on Wednesday.

– Key figures around 1100 GMT – 

London – FTSE 100: UP 0.5 percent at 7,554.28 points

Frankfurt – DAX 30: UP 1.0 percent at 12,738.41

Paris – CAC 40: UP 0.1 percent at 5,528.22

EURO STOXX 50: UP 0.4 percent at 3,551.95

Tokyo – Nikkei 225: DOWN 0.2 percent at 22,472.78 (close) 

Hong Kong – Hang Seng: DOWN 0.3 at 30,723.88 (close)

Shanghai – Composite: FLAT at 3,081.18 (close)

New York – Dow: DOWN 0.3 percent at 24,099.05 (close)

Euro/dollar: UP at $1.1997 from $1.1993 at 2100 GMT

Pound/dollar: UP at $1.3647 from $1.3617 

Dollar/yen: DOWN at 109.84 yen from 109.87

Oil – Brent North Sea: DOWN 24 cents at $72.89 per barrel 

Oil – West Texas Intermediate: UP 13 cents at $67.38