Asian markets started cautiously Tuesday while the euro’s recent rally was hobbled by profit-taking and below-par economic data, with focus turning to the Federal Reserve’s latest gathering this week.
While not expected to result in any shift in interest rates, the Fed meeting will be pored over by traders hoping for some clues about future hikes and its timetable for winding down its bond holdings.
The meeting is a key part of a stand-out week for US-watchers. It ends Wednesday, the same day second-quarter economic data is released, while big-name firms are at the height of their reporting season.
Thrown into the mix is the ongoing drama surrounding Donald Trump’s administration, with his son-in-law and top adviser Jared Kushner giving testimony Monday denying colluding with Russia to sway the November presidential election.
“The high level of trepidation continues to weigh on market sentiment as congressional hearing of White House advisors all but guarantees some headline risk and a possible escalation of the Russia-gate bluster,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
“Risk sentiment is indecisive due to the political commotion in Washington but with so much dollar risk to roll out including (the Fed meeting and growth data) amidst a busy week for US corporate earning, investors have been reluctant participants so far this week showing a minimal appetite for markets in general.”