Is the market even trading on the basis of today's Federal Open Market Committee meeting? That's Saxo Bank head of FX strategy John Hardy's main question as we head towards an almost-certain interest rate hike with hawkish expectations built in across the board.

"One thing that could shake up expectations is Fed chair Powell stating that he wants to see press conferences at every Fed meeting, thus expanding the number of venues for potential rate hikes," says Hardy.

Investor expectations are divided between forecasts of three and four 2018 rate hikes, adds Saxo Bank head of commodity strategy Ole Hansen, but no move beyond the 3% terminal rate is expected.

Beyond the Fed and the dollar, Hardy sees EURGBP moving lower ahead of Thursday's Bank of England outing with the 0.83 level potentially coming into view as the Brexit discount on GBP dissipates.

Energy shares posted the strongest performance in equity markets over the past 24 hours, reports Saxo equities head Peter Garnry, with Hansen adding that the 2% breakout in oil prices Tuesday represented both a technical break of the extant triangle formation and a potential geopolitical shift in the wake of meetings between US president Donald Trump and Saudi crown prince Mohammed bin Salman.

"Bin Salman and Trump are looking to ramp up pressure on Iran in a move that could see the US impose further sanctions on Tehran," says Hansen, adding that such a move could resrict Iranian output by 250,000-500,000 barrels/day by year-end.

Further oil direction will be provided by today's inventory report from the US Energy Information Administration, which comes in the wake of API reporting a surprise drawdown Tuesday.

In single stocks, Garnry says that Facebook shares found strong support at the $161-162 level following their dip below the 200-day moving average, closing Tuesday's session at 168.15. "I think we are likely to see further volatility and big daily swings in FB," Garnry concludes.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)