Financial Market Review for December 12 2017 Asian shares took a small step back on Tuesday after three straight sessions of gains, with markets consolidating in the hope an upswing in global growth could outlast a likely hike in U.S. borrowing costs this week. The latest promising news came from China where banks doled out a surprisingly generous dose of credit in November, which could bode well for a pickup in retail sales and industrial output due later in the week. MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) drifted off 0.3 percent, having bounced 2 percent in the past three sessions. Moves were minor across the region, with blue-chip Chinese shares down 0.5 percent . Japan's Nikkei eased 0.3 percent, after the index scored its highest close in 25 years on Monday. Speculators pointed to a modestly firmer start on most European bourses, while E-Mini futures for the S&P 500 were up a slim 0.04 percent. Wall Street had been led higher by technology and energy stocks, with Apple Inc making the biggest contribution. The Dow rose 0.23 percent, while the S&P 500 added 0.32 percent and the NASDAQ 0.51 percent. There was no lasting market impact from an explosion in New York's busy Port Authority commuter hub, described by New York Mayor Bill de Blasio as an "attempted terrorist attack". Investors continued their policy vigil with the Federal Reserve set to end its two-day meeting on Wednesday, while the European Central Bank meets on Thursday. The divergence in Fed and ECB policy was supposed to be bullish for the dollar, given it had widened the premium offered by U.S. two-year yields (US2YT=RR) over German yields (DE2YT=RR) to 256 basis points from 188 basis points this time last year. Yet the euro is currently up 12 percent on the dollar this year, while the dollar is down 8 percent on a basket of currencies ,an indication interest rate differentials aren't everything in forex. On Tuesday, the euro was steady at $1.1772 having failed to clear resistance around $1.1812 overnight. The dollar was idling at 113.48 yen, just off a one-month top of 113.69. The dollar held firm near two-week highs versus a basket of major currencies on Tuesday, with traders awaiting the U.S. Federal Reserve's policy meeting this week for fresh catalysts. The dollar index, (DXY) which tracks the greenback against a basket of six major peers, inched up 0.1 percent to 93.931. That was within sight of Friday's peak of 94.087, the highest since Nov. 21. The Fed is widely expected to raise interest rates at its two-day policy meeting that will end on Wednesday and is expected to tighten policy further next year. Most economists polled by Reuters now expect three more rate rises next year compared with two when surveyed just weeks ago, although the outlook remains clouded by stubbornly subdued inflation.
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