World shares and oil have dipped and the dollar held firm in muted trade today, as traders steer clear of big bets ahead of a Federal Reserve meeting and data offering an insight into the health of the U.S. economy. Global growth in the months ahead is pegged to the rate of recovery in the U.S. economy and investors are worried an early withdrawal of support from the U.S. central bank by tapering back in its bond purchases could threaten the outlook.
Ahead of the U.S. Federal Reserve policy statement due at 1800 GMT, the dollar index had inched up 0.1 percent to 81.877. The index had hit a five-week trough earlier this week as investors bet the Fed would reassure markets that interest rates would remain low for a long time even if it started scaling back stimulus this year.
Meetings of other major developed world central banks in coming days, including the European Central Bank on Thursday, and the key U.S. payrolls report on Friday are also prompting investors to tread cautiously
A fall in retail sales in Europe’s fiscal lynchpin, Germany, has added to investor concerns there, leading the broad FTSEurofirst 300 index down 0.3 percent and the euro zone’s blue-chip Euro STOXX 50 index down 0.4 percent in early trade.
German bonds were lower though traders said this was largely due to investors making way for an upcoming sale of new 30-year government bonds. The selling lifted the current German 30-year yield by 2 basis points to 2.5 percent.
Elsewhere in European trade, France’s cash-strapped government may freeze income tax thresholds next year as a way to raise additional revenue. President Francois Hollande’s Socialist government needs to raise an extra 6 billion euros in revenue next year and is seeking the right balance between belt-tightening and tax hikes.
After a sub optimal session for traders in Asia, the MSCI world equity index was down 0.25 percent. Chinese stocks rose 0.5 percent after the government pledged to keep growth stable in the second half of the year.
Crude oil prices eased 0.2 percent to around $106.70 a barrel, extending a 0.6 percent decline on Tuesday but remain up 4.5 percent this month and on course for their best monthly gain since August last year.
Gold gained 0.5 percent. It is up 8.2 percent so far this month, on track to snap a three-month losing run and mark its biggest monthly rise since January 2012, but it is down 20 percent since the beginning of 2013.
Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.