Markets Pause As FOMC Meeting Begins Tuesday

EUR/USD Daily Fundamental Forecast – September 19, 2017

EUR/USD Daily Fundamental Forecast – September 19, 2017

Fed in focus: Traders in Europe were waiting for the U.S. Fed to provide its policy update on Wednesday, which could affect multiple asset classes, such as stocks globally, currencies and gold.

Another safe haven, the Swiss franc, hit a multi-year low against the euro and analysts said this trend would remain as long as the US continues to favour a diplomatic solution to the North Korean crisis.

The Fed has raised a benchmark short-term interest rate four times since late 2015.

The dollar fell 0.3 percent against the euro ahead of the two-day talks, with markets awaiting guidance on whether the Fed will signal a further hike in interest rates at its December meeting. Surveys of economists show they do not expect the Fed to raise interest rates at this time.

It will also dictate the legacy of Federal Reserve chair Janet Yellen.

Analysts said despite the expected rise in borrowing costs, investors were still piling into equity markets on renewed hopes that Trump can push through the market-friendly policies that helped drive a global rally at the start of the year.

A fast-charging euro then hit its highest against the Swiss franc EURCHF= since the Swiss National Bank sent markets into shock in early 2015 when, without warning, it removed a cap it had been using to control the franc. The Fed's preferred measure of inflation has touched the 2 percent target once or twice since the 2008 collapse, but that's it.

Microsoft shares ended down 0.2% while Alphabet was off 0.6%, with both stocks seeing a pickup in volume late in the day.

Oil prices remained steady through much of the Asian trading session, with Brent crude last up 0.61% at $55.82 per barrel and West Texas Intermediate rising 0.96% at $50.39.

The Bank of Japan holds its regular policy meeting on Thursday with many expecting no change in its monetary policy stance.

In a speech at the United Nations, U.S. President Donald Trump warned that the United States will be forced to "totally destroy" North Korea unless Pyongyang backs down from its nuclear challenge. The S&P 500 added 3 points, or 0.1%, to 2,504.

Movers: Shares of J Sainsbury PLC (SBRY.LN) rose 1.9% even as the grocer lost market share in the 12 weeks to September 10.

Meanwhile, higher yields might lure some investors away from assets perceived as risky like stocks, to find richer yields, with the Dow Jones Industrial Average DJIA, +0.22% and the S&P 500 index SPX, +0.14% on Monday being pushed to all-time highs. Economists had expected housing starts to jump by 1.7 percent.

Bob Evans Farms (BOBE.O) rose 5.7 percent after packaged foods company Post Holdings (POST.N) said it would buy the frozen meals maker for about $1.5 billion.

The most influential movers on the index also included Potash Corp of Saskatchewan (POT.TO), which gained 3.5 percent to C$23.59, and Agrium Inc (AGU.TO), which was up 3.6 percent to C$132.65.

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