Forex Today: A typical calm ahead of the Fed verdict

A quiet affair in Asia, as traders almost turned a blind eye to the upbeat Japanese Tankan surveys, although the yen bulls remained underpinned somewhat, keeping USD/JPY flat-lined around 5-DMA.

While the greenback kept its consolidative mode intact in Asia, with all eyes on the upcoming FOMC interest rate decision and Statement of Economic Projections (SEP) due to be reported in the American afternoon.

Ahead of the Fed event, we have the UK labor market report and US data-flow to look forward to, although limited reaction is expected on the data releases, as the FOMC decision is expected to emerge the main market moving event for today, which will set the tone in the market for the coming months.

The US economists at Goldman Sachs published their preview on the upcoming FOMC interest rate decision and its impact on the greenback, noting that, “In line with market pricing, we expect the FOMC to raise the federal funds rate by 25bp.”

Main topics in Asia

Wall Street's bubble just keeps on going, Dow getting close to 20,000

Wall Street keeps on going and the Dow closed within eye shot of the 20,000 psychological level on the last day before the awaited FOMC decision tomorrow.

BOJ steps up purchases of super long JGBs

Rising treasury yields is making it hard for the Bank of Japan (BOJ) to cap gains in the Japanese government bond (JGB) yields at the long-end of the curve.

Japanese economy to expand 1.5% in FY 2017

As per Nikkei report, the Japanese government sees the economy expanding 1.5% in FY 2017.

Asian stocks outside Australia turn cautious ahead of Fed

The stocks on the Asian bourses shrugged-off record-high Wall Street stocks, and now trade cautiously heading into the FOMC decision due later on Wednesday.

Key focus for the day ahead

FOMC Preview: Economic projections 'matters most' - BAML

BAML’s US economics team noted that the SEP, in particular, will be influential on financial markets, especially the FOMC member projections for the outlook for the Fed funds rate, known as “the dots”.

UK: Focus on labour market report – Danske Bank

Research Team at Danske Bank suggests that the focus of investors will be on the release of UK labour market report for October.

USD: The Fed’s FX balancing act - Rabobank

Jane Foley, Research Analyst at Rabobank, expects that the Fed and the US Treasury will be wary about the risks associated with another lurch higher in the USD going into 2017 which could have an influence on the tone that the Fed chooses to set during today’s policy statement.  

EUR/USD flirts with highs near 1.0640, FOMC in focus

The EUR/USD pair is seen extending its steady recovery path into the early European morning, now advancing further to test the mid-point of 1.06 handle.