Federal Reserve Expected to Hold US Interest Rates Steady

With no new actions by North Korea over the weekend, investors pushed Europe's main share index to a six-week high.

S&P 500 Index futures were down less than 0.1 percent after the underlying measure rose 0.2 percent to a fresh record on Monday.

The benchmark Sensex index rose 0.30% or 95.83 points to 32,368.44.

Earlier in the day the Dow touched a record high 22,355.39, while the S&P 500 climbed to a record 2,508.32, and the Nasdaq reached a record 6,477.77. It declined 1 percent on Monday. The prior month's reading was revised to +0.3% from +0.6%. The prior month's reading was revised to +0.4% from +0.5%.

There was little reaction to a report from the National Association of Home Builders showing a bigger than expected drop in homebuilder confidence, as the data was impacted by recent hurricanes.

Even though Fed chief Janet Yellen has raised its target federal funds rate four times since December 2015 - with a possible fifth increase happening Wednesday - don't expect interest on your savings deposits to rise any time soon.

The accompanying statement should flag that the recent spate of hurricanes will have caused some softness in the data, but that this will pass in due course and does not affect the overall path of policy towards a tighter position than hitherto.

Back in 2009-2011, while still at the Fed, Warsh was keenly anxious about inflation at a time when consumer price growth was actually deeply undershooting the central bank's 2% target and unemployment remained very high.

The Canadian dollar was on the defensive after Bank of Canada Deputy Governor Timothy Lane said on Monday that the currency's strength will be a factor in future rate decisions. A rising interest-rate climate tends to boring the appeal of nonyielding bullion. China's currency slipped to a two-week low offshore, and also weakened in Shanghai, amid efforts by policy makers to counter excessive strengthening.

European stocks are mixed on Tuesday as caution has crept in ahead of a two-day policy meeting of the Federal Reserve staring later today, with investors looking for hints on future US monetary policy. Gold hit a 2-1/2 week low, with spot gold XAU= down 0.6 percent at $1,311.51 an ounce. The metal was headed for a weekly loss of 1.9%.

The U.S. labor market remains robust with the national unemployment rate at 4.4 percent, near a 16-year low.

Crude oil prices were unsteady, but stayed near last week's multimonth highs. It added 15 cents on Friday. WTI crude saw a 5.1% weekly rise. It eased 0.1% versus the yen after marking its highest since July 27 overnight. Baker Hughes on Friday reported that the number of active US oil rigs fell for a second week in a row, by 7 to 749 rigs.

The Fed's counterparts in Frankfurt and Tokyo will be among those watching the process most closely, given the potential ripple effects on their markets and economies, and the lessons to be learned from the USA experiment. The yield fell 27 basis points to 2.53 percent, having earlier touched 2.50 percent, the lowest since January 2016. The three-year yield was at 2.17 percent, extending last week's surge, and closing in on a three-year high.

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