The Dollar trade flat ahead of U.S. economic data & Fed meeting

Good Morning,

- The Dollar trade flat ahead of U.S. economic data & Fed meeting. The U.S. dollar index, was last flat at 81.030.

- Asian stocks rose, with the regional index advancing a third day to extend its six-year high. Japan's Nikkei 0.57%, Hong Kong's Hang Seng 0.69% (07:07 GMT), Korea's Kospi 0.64%, Australia's ASX 200 0.19% and China's Shanghai 0.24%.

- U.S. Treasuries lower before the Federal Reserve starts meeting today. Fed policy makers are expected to cut bond purchases for the sixth time while debating the preconditions for increasing interest rates at their two-day meeting that ends tomorrow.

- Nomura on EUR/USD: EUR/USD has not rallied to form a wave-4 correction and instead continues to extend lower in impulsive decline, notes Nomura. "Prices are moving further from old trend line and pivot support and there’s not yet a sign of waning downside momentum. Our strategic outlook has been and remains bearish Euro as this decline is expected to unfold towards 1.33 and lower over the coming weeks," Nomura projects. "Short/term, the wave count is suggesting a decline today to mark the end of a 5-wave pattern from 1.3485, this decline will mark the end of a larger 5-wave decline from 1.3650/40," Nomura adds. "We’ll be watching the nature of the next bounce (from low 1.34’s) to uncover what degree of downtrend is in play," Nomura argues.

- IMF warns: Sterling is “overvalued” and this may hamper efforts to rebalance the British economy. In an otherwise-optimistic annual assessment of the UK economy, the IMF told that the pound was 5pc to 10pc overvalued. This could hit exporters and take some of the steam out of the improving economy – the fastest growing among the world’s largest countries, according to the fund. The IMF team agreed that the Bank of England’s ultra-loose monetary policy was the right course at present but warned interest rates may have to rise if inflation starts to increase.

- Fed policy makers will cut asset purchases by another $10 billion to $25 billion tomorrow, according to the median of 38 economists’ estimates compiled by Bloomberg. There’s a 63 percent probability the Fed will raise interest rates to at least 0.5 percent by July 2015, based on Fed funds futures.

- BOJ’s Ishida says companies are more actively passing on higher costs to consumers. Economy must stay firm for this trend to continue. BOJ will look at various elements of economy and prices in judging whether its price target has been met. Economic data fluctuates every month so hard to set a single indicator in determining if BOJ’s price target is met in a “stable manner”.

- Japan FinMin Aso: Government to decide on further sales tax hike by year-end.

- The availability of jobs in Japan rose to the highest in 22 years, in an encouraging sign that a tighter labour market will boost wages and support consumer spending.

- S&P affirmed Australia at 'AAA/A-1+', on monetary and fiscal flexibility, outlook remains stable. The sovereign credit ratings on Australia benefit from the country's strong institutional settings, its wealthy and resilient economy, and a high degree of monetary and fiscal policy flexibility. The country's high external and household indebtedness, as well as vulnerability to weakening commodity export demand, moderate these strengths.

- Argentina is on course to default on its debt for the third time in 28 years on Wednesday – an event that could cost U.S. hedge funds millions of dollars and provide investors with yet another worry amid geopolitical turmoil. The Latin American country has just two days to comply with a U.S. legal ruling to repay $1.3 billion to so-called holdout creditors, who snapped up junk bonds around the time of its massive $82-billion default in 2001 and refused to accept the debt restructurings that followed.

- Watch today: US house prices, US confidence.

Have a nice Day!