Yen benefits from caution before Fed meeting; European
shares edge higher
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[September 16, 2020] By
Elizabeth Howcroft
LONDON (Reuters) - Investors were generally
cautious before the Federal Reserve meeting on Wednesday, boosting the
yen, as the rally that pushed up shares after Chinese and U.S. economic
data in the previous session slowed in early London trading.
Risk appetite was limited ahead of the U.S. Federal Reserve's policy
meeting, and its statement at 1800 GMT.
European shares were mixed at the opening, but then rose, with the Stoxx
600 up around 0.3%, pushed up by gains in retail stocks.
The MSCI world equity index, which tracks shares in 49 countries, was up
0.2% at 0724 GMT, while MSCI's main European Index was up 0.3%.
(Graphic: World stocks,
https://fingfx.thomsonreuters.com/
gfx/mkt/gjnvwjelxpw/Pasted%20image%201600243112184.png)
The Fed is not expected to make changes to its monetary policy at the
meeting, which will be its first since it announced that it would pursue
average inflation targeting.
![](http://archives.lincolndailynews.com/2020/Sep/16/images/ads/current/charrons_bch041713.png)
Although the economic projections are expected to be somewhat improved
from the last round of forecasts in June, Fed Chair Jerome Powell is
expected to stick to his message that the road to recovery will be long
and uncertain.
"While acknowledging the more rapid improvement in the economic
backdrop, we expect the message to remain one of caution," wrote RBC
Capital Markets analysts in a note to clients.
"There is no upside for the committee to be positive at this juncture."
Investors will also be watching for U.S. retail sales data, due at 1230
GMT, which is expected to show a robust increase.
London's FTSE 100 lagged other European indexes, down 0.4%, and the
pound was down against the euro, weighed down by fears of a disorderly
departure from the EU single market.
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![](../images/091620pics/busine37.jpg)
Passersby wearing
protective masks walk past an electronic board showing Japan's
Nikkei average, the exchange rate between Japanese yen against the
U.S. dollar and other world's benchmarks outside a brokerage, amid
the coronavirus disease (COVID-19) outbreak, in Tokyo, Japan
September 14, 2020. REUTERS/Issei Kato
![](http://archives.lincolndailynews.com/2020/Sep/16/images/ads/current/graue_20ENCORE_090820.png)
UK inflation dropped to its lowest rate in almost five years last month, led by
a large reduction in meal prices.
"We’ve already started to see the early signs of the unemployment rate starting
to edge higher, and with the furlough coming to an end next month and already
being tapered, this deflationary wave is likely to get worse in the short term,"
wrote Michael Hewson, chief market analyst at CMC Markets UK.
The yen hit a two-week high of 105.250 to the U.S. dollar overnight, as
investors sought safer assets, and it held close to these levels at 105.325 at
0726 GMT.
Against a basket of currencies, the dollar was a touch weaker, down 0.1% at
93.005 at 0740 GMT.
The euro was up 0.1% at $1.18595.
High-rated eurozone government debt was little changed, with the benchmark
German 10-year Bund yield at -0.483%.
Oil prices rose for a second day in a row, with U.S. crude oil hitting one week
highs, up 2.4% at $39.21 a barrel at 0746 GMT.
Gold prices rose, up 0.5% at $1964.38 an ounce at 0747 GMT.
Elsewhere, the World Trade Organization ruled that the United States had
breached global trade rules with the multibillion-dollar tariffs it imposed
during its trade war with China.
The decision had limited market impact as it is only the start of a legal
process that could take years.
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