MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.2 percent, while Japan’s Nikkei .N225 put on 0.5 percent.
Chinese May industrial output and retail sales figures out this morning (0200 GMT) are forecast to show slightly slower but still solid growth, but will likely just be an appetizer to the Fed’s main course.
The central bank is scheduled to release its decision at 1800 GMT today with a news conference to follow from Chair Janet Yellen.
Investors fully expect a rate rise largely because Fed officials have told them to, so attention will rather be on the outlook for policy and particularly when the central bank might begin to wind down its massive portfolio of U.S. debt.
“The main focus this week will be on the Fed’s balance sheet policy,” said Michelle Girard, chief U.S. economist at RBS.
“While we expect the formal announcement of a change in its balance sheet policy to be made in September, we do not rule out the possibility that strong guidance regarding the time frame for tapering is delivered sooner.”
While the Fed still has another hike penciled in for this year, a recent run of soft inflation data has left fund futures implying only a 40 percent chance of a move by December.
The market’s five-year outlook for inflation in five years time has been falling steadily and currently stands at a seven-month trough of 2.18 percent.
It had spiked as high as 2.52 percent last November in the wake of President Donald Trump’s surprise election victory.
This leaves the market vulnerable to any hawkish spin from the Fed, which would likely slug Treasury prices while lifting the embattled U.S. dollar.
The currency could do with the help having taken a fresh knock yesterday when the head of Canada’s central bank put his own hawkish spin on the outlook for rates there.
The U.S. dollar fell as far as C$1.3209 CAD=, its lowest since Feb. 28, having shed two cents in as many days.
It also lost ground to sterling GBP= after UK inflation data surprised on the high side and amid reports Britain’s ruling Conservative Party was likely to sign a deal today to form a minority government.
Against a basket of currencies, the dollar was a whisker firmer on Wednesday at 97.016 and little changed on the Japanese yen at 110.04 JPY=.
In commodity markets, oil slipped after an industry group reported a surprise rise in crude stocks, confounding expectations for a drawdown.
Benchmark Brent crude retreated 47 cents to $48.25 a barrel while U.S. light crude shed 52 cents to $45.94. – Reuters