Dollar rises, treasuries fall as Fed meeting looms

Bloomberg

The dollar advanced, while Treasuries tumbled as corporate results and economic data bolstered optimism that growth is accelerating before the Federal Reserve’s latest policy decision. U.S. stocks erased early gains.
The S&P 500 Index was little changed as 10-year yields above 2.50 percent weighed on high dividend paying industries and boosted banks. Apple Inc. rose the most since July after earnings topped estimates. Siemens AG and Volvo AB results lifted European shares to the best gain in a week. After its worst month since March, the greenback strengthened as private data showed a jump in hiring and manufacturing growth accelerated. The pound rose before a parliamentary vote on formally triggering an exit from the European Union.
Officials aren’t expected to increase rates when the Fed convenes, but investors will trawl the statement accompanying the decision for any change in forward guidance which earlier indicated there could be three hikes this year. Policy makers must weigh a raft of data hinting the U.S. and global economies are on a firmer footing against the turmoil caused by Trump’s first weeks in the White House, and the shadow thrown over his expected pro-growth policies.
“The markets are caught in this dilemma about whether to pay more attention to fundamentals or to politics,” said Andrew Milligan, head of global strategy at Standard Life Investments Ltd. in Edinburgh. “We’re getting a fairly steady stream of profits exceeding expectations. The dollar is the canary in the coal mine—it’s the asset to watch because it’s so closely correlated to risk-on, risk-off sentiment across all other assets.”