* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
* Dollar, bond yields lower ahead of expected Fed hike
* Oil snaps out of a 6-day, 11-percent slide
* European focus on Dutch elections
By Marc Jones
LONDON, March 15 Markets focused on what is
expected to be a third rise in U.S. interest rates since the
financial crisis later on Wednesday, while there was also relief
in commodity markets as oil pulled out of a six-day dive.
The dollar slipped against the euro, the yen
and the pound after a near 3 percent gain over the last
five weeks, while U.S. bond yields hovered at just under 2.6
percent and gold rose for the first time in three days.
"We are estimating three Fed rates hikes this year, we have
seen some talk that they might be a bit behind the curve and
four might be on the table but we don't think that is the case,"
Kully Samra, UK Managing Director at Charles Schwab, said.
New economic projections from the Fed, including its 'dot
plot' showing what policymakers expect to happen with rates, and
a Janet Yellen press conference will all be key, he added.
Oil was the other main market mover, pulling out of a
six-day slide that had seen Brent crude drop by more
than 10 percent from $56.50 a barrel to the cusp of $50.
It was last up 1.4 percent at $51.64 a barrel with U.S. WTI
back up to almost $49. Those moves helped boost European
shares as basic resource stocks rallied in tandem.
The focus in Europe is on Dutch elections where anti-EU
firebrand candidate Geert Wilders will provide the latest test
of anti-establishment and anti-EU sentiment after Brexit.
It also comes ahead of votes later this year in
France and Germany, the two biggest economies in the euro zone.
The euro edged up 0.2 percent to $1.0624 but remained
below Monday’s more than 1 month high of $1.0714, while euro
zone government bond yields dipped.
The latest Dutch opinion polls put the centre-right VVD
party of Prime Minister Mark Rutte ahead of Wilders' PVV (Party
for Freedom) by 3 percentage points.
"The repercussions for France are the key aspect of this
election, and if we see that the populists are keeping their
momentum that will be reflected in French government bonds," DZ
bank strategist Christian Lenk said.
Sterling fell back below $1.22, halving its day's gains,
after data for the three months to January showed a
deeper-than-expected fall in the pace of wages growth, the
latest sign a previously robust economy may be stuttering.
London's main FTSE stock exchange index, whose
internationally-focused stocks tend to gain when sterling
weakens, turned higher after the data to stand 0.3 percent up on
In the United States, Fed fund futures are
pricing in a more than a 90 percent chance of a rise in rates
later. Core CPI, retail spending data and New York Fed
manufacturing figures are also due.
The dollar pullback ahead of the decision allowed emerging
equities and currencies to post modest gains with the Indian
rupee outperforming for the second day as it raced to a new
Wall Street futures were pointing higher in New York too.
Charles Schwab's Samra added that research showed U.S. stocks
tend to do better when the Fed takes it slowly in the first year
of a rate hike cycle but picks up the pace in the second year.
The Bank of Japan also began a two-day monetary policy
meeting on Wednesday. It is expected to hold its policy steady
and stress that inflation is nowhere near levels that justify
talk of withdrawing its massive stimulus.
Having posted its second-biggest daily gain this year in the
previous session, MSCI's broadest index of Asia-Pacific shares
outside Japan ended up a cautious 0.17 percent
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Alexander Smith)