Dollar Flat as Markets Await Fed

 
Snapshot: 

        Dollar flat; 10-year Treasury yield at 1.932%; U.S. stock futures fall; Brent at $64.43; gold at $1200.40
        -Watch for: S&P/Case-Shiller Home Price Index, Conference Board consumer confidence; earnings from Ford, United Parcel Service, Merck, Pfizer, Bristol-Myers Squibb, Aetna, T-Mobile, Coach, Twitter, Kraft Foods
        News: China Readies Fresh Easing to Tackle Specter of Debt; Traders on Guard in Case BOJ Acts; Bank of Russia Opposes Forex Restrictions
        In currency markets Tuesday, the British pound fell 0.2% against the dollar to $1.5190 after the U.K. economy grew more slowly than expected in the first quarter. Slower growth is likely to encourage the Bank of England to hold off for longer before raising interest rates.
        The euro was 0.1% higher against the buck at $1.0885.
        The dollar was largely unchanged versus its rivals in Asia, with traders refraining from making any aggressive bets before a national holiday in Japan and the Bank of Japan's one-day policy board meeting on Thursday.
        "The dollar/yen is now well-balanced between fading hopes for an early rate increase in the U.S. and lingering expectations about further easing in Japan," said Takahiro Iizuka, a trader at Mizuho Trust and Banking.
        U.S Treasurys remained rangebound as traders look ahead to the upcoming FOMC meeting and 5- and 7-year auctions.
        Monday's 2-year auction contributed to the front-end underperformance while the 5-year sector appears to have cheapened slightly ahead of Tuesday's $35 billion auction, according to Barclays.
        At 4.38am ET, the 10-year yield was 1.932%.
        In European bond markets, Greek two-year bond yields fell more than a percentage point to 20.9%.
        "The Greek government looks to be laying the ground for at least some form of political compromise," said analysts at Rabobank.
        Wall Street remained jittery, with stock futures sliding into the red ahead of the Federal Reserve kicking off its two-day policy-setting meeting, which will be closely watched for any clues on the first rate hike.
        A slew of earnings reports were also on tap to keep investors busy, including results from Ford, Pfizer and T-Mobile ahead of the bell.
        "With the strength in equities of late, investors are looking for any excuse to lock in some profits and Fed meetings tend to provide a prompt," said Mike McCudden, head of derivatives at stockbroker Interactive Investor, in a note. "However, with a low rate and artificially stimulated global environment equities are still looking to continue their trend higher."
        Adding to Monday's losses, futures for the Dow Jones Industrial Average dropped 41 points, or 0.2%, to 17,949, while those for the S&P 500 index gave up 0.2% to 2,099.75. Futures for the Nasdaq-100 index lost 6 points, or 0.1%, to 4,516.75, with Apple shares helping cap losses for the benchmark.
        The Federal Reserve Open Market Committee meeting kicks off on Tuesday, but the interest-rate statement isn't released until Wednesday afternoon at 2pm ET. Investors will be looking for clues as to whether a rate hike in June is still in play, although a large majority of Fed watchers don't think the central bank will provide any hints, preferring to keep all options on the table.
        For the discussion on Wednesday, the FOMC will have the first-quarter GDP number to include in their assessment of the economy and interest rates.
        Consumer confidence, due at 10am ET, is expected to climb to 102.5 in April, after surging to 101.3 in March.
        Tony Cross, market analyst at Trustnet Direct, said in a note the confidence data will be "closely followed" as it "as it could carry some impetus for the timing of a rate hike by the Fed".
        At 9am, the Case-Shiller home price reading is out, forecast to show continued moderate growth just shy of 5% year-over-year, according Daiwa Capital Markets.
        Oil prices declined in London as one of the world's largest oil producers vowed to remain a key supplier to Asia, and China in particular.
        Asian demand for crude oil remains strong and Saudi Arabia is ready to supply to the continent, the kingdom's oil minister Ali al-Naimi said in a speech in Beijing.
        "As the Asian population grows, and as the middle class expands, so the demand for energy will increase," said Mr. al-Naimi. "Saudi Arabia will remain the number one supplier."
        The oil official said the recent slump in oil prices, followed by a minor recovery, harms long-term plans and investments in the industry. Cheap oil has helped growing economies in Asia, but also posed difficult challenges for many of the oil producers, he said.
        "Oil is a long-term business, requiring long-term plans and investment...sudden rises or falls in the cost of oil are not welcome," Mr. Naimi says.
        June Brent crude on London's ICE Futures exchange fell $0.40 to $64.43 a barrel. On the New York Mercantile Exchange, light, sweet crude futures for delivery in June traded at $56.63 a barrel, down $0.34.
        Gold prices were fractionally higher in cautious trade on the London spot market ahead of the FOMC meeting which starts later Tuesday.
        Spot gold was up 0.03% at $1,201.93 a troy ounce in morning European trade, moving within a narrow $4 range between $1,199.35 an ounce and $1,203.75 an ounce.
        "The two-day FOMC meeting begins tonight in the U.S. and before the crucial monetary statement is released, gold is unlikely to move wildly," said Howie Lee, an investment analyst at Phillip Futures.
        China Readies Fresh Easing to Tackle Specter of Debt
        China's central bank is planning to launch a fresh credit-easing program, as Beijing's flagship plan to restructure trillions of dollars of local-government debt hits snags.
        Traders on Guard in Case BOJ Acts
        Tokyo share prices are at a 15-year high and the economy appears to be slowly shaking off last year's recession, but traders in financial markets are still on high alert over the Bank of Japan's next policy board meeting this week.
        French Consumer Confidence at Five-Year High
        Consumer confidence in the eurozone's second-largest economy rose for the third consecutive month in April to reach the highest level in over five years.
        Noyer: French Economy Must Reform
        The French economy could grow over 1.5% next year if the government steps up efforts to make France more competitive, the governor of the Bank of France said.
        Bank of Russia Opposes Forex Restrictions
        The Bank of Russia said late Monday that it opposes any restrictions on using foreign currencies in Russia, addressing earlier calls from the country's security council.
        U.K. Economy Slows Ahead of Election
        The U.K. economy slowed, casting a shadow over the government's economic track record less than two weeks before a closely fought national election.
        Write to paul.larkins@wsj.com
        (END) Dow Jones Newswires

        April 28, 2015 06:08 ET (10:08 GMT)

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