Gold traded around the $3,700-an-ounce level, after briefly breaching the mark in the prior session buoyed by a softer dollar. A gauge of the greenback edged lower Wednesday, hovering around levels last seen in March 2022. Attention in Asia will also be on a 20-year government bond auction in Japan as political uncertainty and lingering fiscal risks keep longer-dated debt under pressure.
A solid reading on US retail sales Tuesday did little to sway markets, with attention firmly on the Fed meeting. Investors are looking for clues on the path of interest rates that will shape the outlook in the months ahead, with some bond traders stepping up options wagers that the central bank will deliver at least one half-point cut.“Markets remain in somewhat of a holding pattern ahead of the Federal Reserve’s decision tonight,” wrote Josh Gilbert, a market analyst at eToro in Sydney. “The biggest risk is that the Fed sounds less dovish than markets are hoping for.”
While Fed officials are still focused on bringing inflation to their target, they’re widely expected to cut rates in an effort to shield the labor market from further deterioration.The value of retail purchases, not adjusted for inflation, increased 0.6% after a similar gain in July.
The control-group sales — which feed into the calculation of goods spending for gross domestic product — climbed 0.7%, indicating a healthy quarter.
“Even if the job market is weak, it’s not hurting the consumer yet,” said David Russell at TradeStation. “While these numbers won’t prevent the Fed from cutting rates tomorrow, they reduce some of the longer-term dovish hopes.”
Treasuries held gains after a solid sale of 20-year bonds. The yield on two-year notes slid three basis points to 3.50%. The euro hit its highest since 2021, while the yen touched its strongest mark in a month. Oil rose as pressure mounted on Russia and the conflict in the Middle East flared up.
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