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Swissquote's Rosenstreich Sees Less Fed Rate Hikes

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It's decision day at the Federal Reserve, Trump and Putin mend fences and oil's close to $48 a barrel. Here are some of the things people in markets are talking about today.

Fed decision

At 2:00 p.m. Eastern Time the Federal Reserve will announce its latest monetary policy decision, with none of the economists surveyed by Bloomberg expecting any change in rates. With market-implied probabilities showing just over a 50 percent chance of two rate hikes by the end of the year, the statement will be scrutinized for further signalling of an increase next month. The bank's plans for reducing the size of its $4.5 trillion balance sheet are also likely to be a central topic of discussion. There is no press conference following today's decision.

Trump's good call

The White House described a phone conversation between President Donald Trump and Russian leader Vladimir Putin, in which they agreed to step up cooperation on Syria, as "very good." The Kremlin said in a statement following the call that the leaders had agreed to a face-to-face meeting on the sidelines of July's G-20 summit in Germany. The president's other communications yesterday proved more controversial, however, after he tweeted that a "shutdown" in September would fix the logjam in Congress. 

Oil recovers

A barrel of West Texas Intermediate for June delivery was trading at $48.15 by 5:38 a.m., staging a recovery from yesterday's drop to a six-week low. The Organization of Petroleum Exporting Countries deepened production cuts in April with output falling by 40,000 barrels a day from a month earlier. Non-OPEC producer Russia will back an extension of the production cut deal that ends in June, according to a government official with knowledge of the matter.

Markets slip

Overnight, the MSCI Asia Pacific excluding Japan Index fell 0.2 percent. Markets in Japan and Hong Kong were closed due to a holiday. In Europe, the Stoxx 600 Index was 0.2 percent lower at 5:48 a.m. with miners leading the losses. S&P 500 futures slipped 0.2 percent as investors awaited the Fed decision. 

Brexit talks

In Brussels this morning, European Union chief Brexit negotiator Michel Barnier revealed his vision for how talks on the U.K.'s exit would progress. In Britain, Brexit Secretary David Davis flatly rejected a report in the Financial Times suggesting the bill for exiting the union could be as high as 75 billion euros ($82 billion), saying the U.K. would walk away from a deal with the bloc if provoked. The pound was trading at $1.2910 at 5:55 a.m. as the fractious atmosphere surrounding the negotiations shows little sign of improving. 

What we've been reading 

This is what's caught our eye over the last 24 hours.

(Corrects size of Federal Reserve balance sheet in first paragraph.)
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