Interest rates futures implied traders saw a 93 % chance the Fed would raise rates by a quarter point to 0.50-0.75% next week, CME Group’s FedWatch showed.
Fed officials cautioned on Monday that the incoming Trump administration’s economic plans should not be cast as if the economy is in crisis, but instead be designed to help the economy’s long-run prospects.
Fed officials worry there is risk that overly aggressive fiscal, tax and other changes could become inflationary given the economy’s current strength. That could force the Fed into more rapid interest rate increases and possibly raise the risk of recession.
The euro steadied on Tuesday, having bounced from a near 21-month low set the previous day after Italian Prime Minister Matteo Renzi's loss in a referendum. The euro eased 0.1 percent to $1.0757. On Monday, it ended up gaining 1 percent on the day.
Expectations that the European Central Bank (ECB) will announce a six-month extension of its massive, trillion-euro bond-buying program on Thursday have risen in the wake of Italy's outright rejection of proposed constitutional reforms in Sunday night's referendum.
Of those anticipating an extension, the overwhelming majority of those polled see the program being extended by six months to September 2017 at the current pace of 80 billion euros ($85 billion) per month. Around a quarter of respondents, however, expect the prolonged timing to be accompanied by a reduction in the pace of purchases by either 10 billion euros or 20 billion euros per month.
Oil prices eased early in Asia as crude output rises in virtually every major export region despite plans by OPEC and Russia to cut production, triggering fears that a fuel glut that has dogged markets for over two years might last well into 2017.
International Brent crude oil futures were trading at $54.55 per barrel at 0128 GMT, down 39 cents, or 0.7 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $51.32 a barrel, down 47 cents, or 0.9 percent.
Reference: Reuters
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