Focus on Fed, dollar, North Korea

The Fed is expected to keep interest rates steady when it announces its rates decision Wednesday U.S. time. Investors, however, awaited details on how the central bank will unwind its $4.5 trillion balance sheet.

Also in focus will be the Federal Open Market Committee’s dot plot, a chart showing Fed members’ expectations about future interest rates. Market expectations for a December interest rate hike have risen in recent days, with the CME Group’s FedWatch tool reflecting a 62.7 percent probability for at least one additional rate hike by year-end.

Still, Fed Chair Janet Yellen might not be keen on signaling an additional rate hike, Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, said in a note. Lien cited softer wage growth, employment and spending since the central bank’s last policy meeting, adding that there was “very little to be excited about” regarding the U.S. economic outlook.

The dollar steadied after sliding against a basket of currencies overnight, with the dollar index standing at 91.844 at 8:11 a.m. HK/SIN. The U.S. currency, meanwhile, was flat against the yen at 111.53.

Elsewhere, investors took note of President Donald Trump’s United Nations address on Tuesday, although there were few resulting moves in markets. In his remarks, Trump called North Korean leader Kim Jong Un a “Rocket Man” on a “suicide mission” and said the U.S. would have to “totally destroy” the hermit state if forced.

Tensions on the Korean Peninsula had been elevated after North Korea’s sixth and most powerful nuclear test earlier this month. More recently, the North launched a missile that passed over Japan on Sept. 15 local time.

Stateside, stocks closed higher on Tuesday. The Dow Jones industrial average rose 0.18 percent, or 39.45 points, to close at a record 22,370.80.

In corporate news, Toshiba has swung back to favoring a consortium backed by Western Digital — a U.S. data company also involved in a joint venture with the Japanese conglomerate — for the sale of its memory chip unit, Reuters reported. Toshiba indicated last week it had entered into a memorandum of understanding with Bain Capital, which backed a separate group bidding for the unit, over the sale. Toshiba stock was up 0.32 percent in early trade.

Meanwhile, the Bank of Japan will be on the radar as the central bank begins a two-day meeting. It’s set to make its interest rate decision on Thursday.

On the energy front, oil prices rose after declining slightly overnight. Brent crude rose 0.4 percent to trade at $55.36 a barrel, a touch below a five-month high of $55.99 set recently. U.S. crude advanced 0.69 percent to $49.82.

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