The US Federal Reserve will be closely watched on Wednesday as it wraps up its two-day policy meeting, announcing its stimulus measures and interest rate decision.
The Fed is expected to reduce its main rate to 0.25% from 0.3% and cut its monthly asset purchases from $85bn to $70bn, according to Barclays Research.
"The only way dealers will be surprised is if the trim is more or less than $10bn," according to IG in a note to investors on Tuesday.
Acting as a backdrop for the meeting, a Labor Department report showed consumer prices rose less than forecast in August. The consumer price index increased 0.1%, the least in three months, after a 0.2% advance in July.
Policymakers have said they watching prices to ensure US doesn't slip into a long period of weakening increases which is said to stifle growth.
Meanwhile, investors have reacted positively to rumours that current Vice Fed Chair Janet Yellen will take over from Ben Bernanke as the new Fed Chairman after Lawrence Summers dropped out from consideration.
Yellen is expected to support a slow tapering of quantitative easing.
"Summers, a former Treasury secretary, would have tightened central bank policy more than Fed Vice Chairman Janet Yellen, said Spreadex trader Max Cohen. "With the more dovish Yellen, we can expect to see less volatility than what economists expected with the appointment of Summers. Consequently, the dollar
sunk near a four-week low."
In the UK, the Bank of England (BoE) will release minutes of its meeting last month when the central bank introduced forward guidance and said they won't raise borrowing costs until unemployment falls to 7%.
While the Bank does not expect the unemployment rate to fall to 7% until late 2016, the recent release of upbeat economic data has prompted investors to forecast an earlier increase.
Some analysts anticipate the unemployment rate will drop to 7% at least a year earlier than the Bank's prediction.
BoE Governor Mark Carney on Thursday defended his plan keep interest rates at the record low of 0.5% for up to three years when the central bank expects the jobs market to pick up.
Wednesday, September 18th
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