Aurelia Butler

Investing.com — This week’s policy-setting meeting by the Federal Reserve dominates activity, with the central bank set to raise interest rates again. The country’s major tech companies are also due to report quarterly earnings, while economic conditions deteriorated in Europe’s largest economy and China Evergrande Group announced changes in the C-suite. Here’s what you need to know in financial markets on Monday, July 25.1. Next Fed hike looms largeThe main focus this week will be on the two-day policy-setting meeting of the Federal Reserve, concluding on Wednesday.The U.S. central bank is widely expected to raise interest rates by 75 basis points after policymakers largely poured cold water on the idea of another full percentage point hike to add on to June’s surprise.Away from the size of the rate hike, investors will be looking at whether the Fed thinks inflation is peaking and the chances of the U.S. economy moving into recession as they try to gauge the scope of a September rate move.At the weekend, former Treasury Secretary Lawrence Summers cast doubt on the likelihood of a soft landing for the U.S., while incumbent Janet Yellen said that she doesn’t see any sign the economy is in a broad recession.2. Germany on cusp of recessionGerman business morale fell more than expected in July, with data from the Ifo institute Monday suggesting Europe’s largest economy is on the verge of a recession.The Ifo institute, a highly regarded research institution, said its business climax index was 88.6, its lowest level in more than two years, while the June reading was also downwardly revised to 92.2.Last week the German manufacturing PMI release fell to 49.2 in July, dropping in contraction territory and its lowest level in 25 months, reinforcing predictions that Europe’s biggest economy is heading into a recession in the second half of 2022.This comes after the European Central Bank raised interest rates for the first time in 11 years last week, ending a policy of negative interest rates that had been in place since 2014.3. Stocks set to open just higher; Big Tech earnings dueU.S. stock markets are set to open moderately higher Monday, with investors awaiting the results from the Fed meeting later this week [see above] as well earnings from a number of the biggest companies in the world.By 6:20 AM ET (1020 GMT), Dow Jones futures were up 150 points or 0.5%, while S&P 500 futures were up 0.5%, and Nasdaq 100 futures were up 0.6%.Monday sees the release of numbers from NXP (NASDAQ:NXPI), Whirlpool (NYSE:WHR), and F5 Networks (NASDAQ:FFIV) after the close. But most eyes will be on the tech sector with Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) starting the ball rolling on Tuesday, Facebook parent Meta Platforms (NASDAQ:META) following on Wednesday, while Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) arrive on Thursday.Disappointing results from Snap (NYSE:SNAP), the owner of Snapchat, last week signaled advertisers had tightened their purse strings in response to a deteriorating economic outlook, which means all eyes will be on the digital advertising space.4. Evergrande restructuring delay?China Evergrande Group announced Friday that Chief Executive Officer Xia Haijun and Chief Financial Officer Pan Darong had left the highly indebted property developer after a probe into the use of company deposits as security to obtain bank loans.Siu Shawn, an executive director, is set to take over as CEO and was reported Friday saying that the firm has reached “basic consensus” on debt restructuring principles with multiple major global creditors.The company caused turmoil late last year when it defaulted on dollar-bond payments and has previously said it was on track to deliver a preliminary restructuring plan for its around $300 billion of liabilities by the end of July.That doesn’t leave much time, particularly given this new shakeup of the company’s senior management. 5. Oil edges higher; Libya aims to double productionCrude oil prices rose Monday, recovering after recent losses as Libya increased its output and ahead of an expected rise in U.S. interest rates.Oil prices have struggled over the last month as traders have feared further interest rate hikes, particularly in the U.S., the largest consumer of crude in the world, could limit economic activity and thus cut fuel demand growth.The Federal Reserve meets this week and is expected to announce on Wednesday another hefty rate hike, probably by 75 basis points.On the supply side, Libya’s National Oil Corporation stated on Saturday that it aims to double production to 1.2 million barrels per day in two weeks. The OPEC member has seen its production plummet by about 50% in recent months amid a power struggle between rival governments and chronic under-investment in infrastructure.By 6:20 AM ET, U.S. crude futures were up 0.9% at $95.58 a barrel, while Brent crude was up 0.8% at $99.14 a barrel. Both benchmarks are lower for the fourth consecutive session. More

WASHINGTON/SAN FRANCISCO (Reuters) – Federal Reserve officials are likely to hit a key milestone this week with an interest rate hike that effectively ends pandemic-era support for the U.S. economy and begins to test whether growth can continue without the central bank’s active help.The Fed is expected to raise its benchmark overnight interest rate by three-quarters of a percentage point to a target range of 2.25% to 2.50% at the end of a two-day policy meeting on Wednesday. That would match the high hit before the COVID-19 pandemic and lift rates to a level officials see as roughly “neutral,” or no longer supporting the economy, over the long run.With that benchmark in view, the debate shifts to questions that will determine whether the economy can avoid a recession in coming months: How low will inflation need to fall before Fed officials conclude it is under control? How high will rates need to rise for that to happen? And how much of a cost will be paid in terms of slower economic growth and rising joblessness?Fed officials coalesced behind aggressive rate hikes as they watched inflation accelerate this year. But there is little precedent for the moment they now face, and little clarity on how monetary policy will be set once inflation begins to ease and as they begin to interpret the outlook differently. “As long as inflation is as high as it is, and no sign of abating, you are going to have a united front,” said Luke Tilley, chief economist at Wilmington Trust. The Fed’s preferred inflation measure is running at a four-decade high of more than 6%, roughly triple the formal 2% target.But even with officials promising a full-tilt battle against destabilizing price increases, it may take as little as two months of slowing inflation for “the hawks and the doves … to make themselves known pretty quickly,” with renewed debate over how much risk it is reasonable to take with the economy to drive inflation down another notch, he said.Hawks and doves is central-bank shorthand for the tension between policymakers more concerned about the risks of inflation – hawks – and those who prioritize the Fed’s other goal of maximum employment – doves.That has become a hard distinction to draw when all policymakers say they are prepared to raise rates as high as necessary https://graphics.reuters.com/USA-ECONOMY/FED/lgpdwawwzvo/index.html to cool inflation.’NO REAL DISPUTE’ So far, there’s been no real decision to make except how large a rate increase to approve at each policy meeting.Inflation has actually accelerated since the Fed began raising rates in March, prompting officials to shift from the quarter-percentage-point increase that month to a half-percentage-point hike in May and to a 75-basis-point increase in June. That’s a trajectory not seen since former Fed Chair Paul Volcker’s battle with inflation in the 1980s. At a news conference on Wednesday, Fed Chair Jerome Powell may start to shape expectations for the next policy meeting in September, but be reluctant to speak much beyond that. The U.S. unemployment rate, meanwhile, has remained at a low 3.6% since March, with more than 350,000 jobs being added monthly and leaving little sense yet that policymakers have reached a point where their efforts to control inflation require a direct tradeoff in terms of jobs.Rate increases are intended to ease inflation by slowing the economy overall. That can also lead to rising unemployment and even an outright recession.At the Fed’s June 14-15 meeting, even the least aggressive policymaker projected a federal funds rate above 3% by the end of this year, which would be the highest since the 2007-2009 financial crisis ushered in an era of low interest rates and benign inflation.The current pace of job creation is “way too high. That’s why there is no real dispute within the (Federal Open Market) Committee,” said Ethan Harris, the head of global research at Bank of America (NYSE:BAC), referring to the Fed’s policy-setting body. Similarly, the current unemployment rate isn’t considered consistent with 2% inflation and “they need to see some evidence it is picking up” to gain confidence that inflation will move persistently lower, Harris added.BECOMING RESTRICTIVE A key unknown is how policymakers will react once inflation and unemployment start to change meaningfully.The 75-basis-point rate hike expected this week marks one of the fastest-ever turns from a low point in rates back to neutral, a level policymakers are eager to reach sooner than later in order to stop stimulating the economy.Each move from here goes deeper into what’s considered “restrictive” territory. While financial markets have priced in higher rates – exemplified by rises in the cost of a 30-year fixed mortgage – they also see an increased risk of recession and, as a result, potential Fed rate cuts as soon as next year.U.S. central bank officials will likely stick with their data-dependent mantra. But the same data can mean different things to different policymakers and are usually evaluated with an eye towards how risks to their goals are shifting. Some may insist on a strict return to 2% inflation regardless of the economic losses needed to get there; others have suggested that data moving convincingly in the right direction might be enough.There are signs consumers already are pulling back – or being forced to – by prices that are rising faster than wages. Retail sales growth on an inflation-adjusted basis has slowed to a crawl. And, in a sign of household stress, AT&T (NYSE:T) said its overall cash flow has suffered because so many of its customers are late with monthly bill payments. The federal funds rate was last in the 2.25%-2.50% range in late 2018 after a string of rate hikes. Signs of economic weakness, however, caused the Fed to halt any further tightening and within roughly eight months it was cutting rates.Inflation was tame at that point, so the focus was on maintaining a labor market that had a similar unemployment rate to now and was producing solid gains for lower-income and less-skilled workers.As Fed policymakers probe how the economy responds to even higher borrowing costs, they may well be faced with a tougher set of choices this time. More

Confidence in the Argentine economy is evaporating as the government struggles with political infighting, an ever-increasing pile of domestic debt and inflation hurtling towards 90 per cent.The US dollar has shot to new highs on the black market as Argentines limited to buying $200 per month rush to money-changers to dump their fast-devaluing pesos. On Friday, dollars were selling on the streets of Buenos Aires for 337 pesos, up 15 per cent in just one week.The rapid deterioration in sentiment and the government’s increasing difficulty in funding itself are raising fears of a full-blown economic crisis similar to those which have wracked the South American grain exporter periodically over the past half century. “The risk of an acceleration in the pace at which the Argentine economy is worsening is significant,” Citi warned this month. The gap between the black market dollar and the artificially controlled official rate has widened to more than 150 per cent — a level last seen during Argentina’s hyperinflation in 1989-1990, according to broker Portfolio Personal Inversiones. Argentina has been largely cut off from international debt markets since its default in 2020. The government is instead funding itself through money-printing and domestic debt, most of which is inflation-linked and comes at ever-higher rates of interest. President Alberto Fernández has ruled out the prospect of a one-off devaluation. Yet many Argentines and bank economists fear the economy will get a lot worse before it gets better. “Sales of dollars are crazier than ever,” Adán, 28, who changes money illegally in central Buenos Aires so preferred not to give his full name, told the Financial Times. “The only thing customers don’t want to hold is pesos . . . many ask questions about what’ll happen next.”The abrupt resignation of economy minister Martín Guzmán on July 2 followed months of squabbling inside the ruling Peronist coalition. It heightened concern over the ability of Fernández’s weak and unpopular government to deal with the fast-deteriorating situation.“I decided to make a big purchase that I’d been putting off because I knew the markets would go bonkers when the minister resigned,” Paige Nichols, a 35-year old marketing consultant, said while shopping in Buenos Aires.Guzmán left just three months after negotiating a $44bn debt restructuring deal with the IMF. But his pledges to rein in the budget deficit were strongly opposed by the powerful vice-president, Cristina Fernández de Kirchner and her radical allies. Kirchner believes the Peronists should instead spend more to shield voters from rising inflation ahead of the 2023 presidential race.Despite Guzmán’s untimely exit, IMF officials believe that the economic targets the fund agreed with Argentina can still be met by his successor, Silvina Batakis, if she moves quickly. Kristalina Georgieva, the IMF’s managing director, said Batakis understood “the purpose of fiscal discipline” and described a “very good” first call with the minister. But events risk overtaking Batakis, a little-known figure whom few believe has the political clout to achieve the cuts in energy subsidies and reductions in money-printing that eluded her predecessor. “No measures will be effective until it becomes clear that vice-president Cristina and her group won’t sabotage Batakis,” said political risk group Eurasia in a note.Inflation, meanwhile, reached 64 per cent a year in June and is forecast to accelerate beyond 90 per cent by the end of the year, according to Morgan Stanley. Despite high world commodity prices, Argentina’s net foreign currency reserves are hovering at just $2.4bn. Costly energy imports are partly to blame but the country’s grain exporters are also hoarding their harvest because they fear an imminent devaluation, rather than shipping and receiving payment in pesos at the unfavourable official rate.Argentina’s sovereign debt to private creditors, which was only restructured in 2020, is trading back in distressed territory. And the country is expected to enter a brief recession this year, with contractions in the second and third quarters, according to a central bank survey. Ignacio Labaqui, senior analyst at Medley Global Advisors in Buenos Aires, said economic factors were only part of the problem. “Even if the government announced a coherent economic plan, Fernández lacks credibility,” he said. The ruling coalition has failed to reassure the public, “it is a matter of when they devalue, not a matter of if”.Two pillars of the IMF deal are to reduce the fiscal deficit over three years and to curb central bank money-printing to fund it. Buenos Aires agreed to these belt-tightening conditions in exchange for a four-and-a-half-year grace period on IMF payments, with full repayment by 2034.

Argentina is limited to printing 765bn pesos ($5.8bn) for the full year to fund its deficit. But the central bank has already printed 630bn pesos this year, more than half of that over the past month and a half. In an attempt to encourage investors to buy Treasury notes, last week Argentina’s central bank promised investors that if prices fell, the bank would protect the investment. Analysts said this could lead the bank to print even more pesos to back the new guarantee. An estimated 900bn pesos ($6.8bn) of local currency debt is coming due in September alone. Confidence in the government’s ability to roll over this borrowing is dwindling amid concerns about its ability to pay and a possible imminent devaluation, despite official denials. Reducing the fiscal deficit before interest payments from 3 per cent of GDP last year to 2.5 per cent in 2022 as outlined in the IMF agreement also looks tough to meet. Energy subsidies, one of the main reasons for the red ink, almost doubled over the 12 months to June, according to Julian Rojo, an analyst at General Mosconi, a local think-tank. On top of the deteriorating economy is Argentina’s fractious politics ahead of next year’s elections, which the Peronists are likely to lose. “The risk ​of a government breakdown is not negligible in Argentina, given the ongoing economic crisis. The government’s ability to complete the current presidential term is a concern,” Labaqui said. Additional reporting by Isobel McGrigor in Buenos Aires More

By 0904 GMT, the rouble was 0.7% weaker against the dollar at 57.64 , earlier dropping more than 1% on the day to 58.0150. It had lost 0.7% to trade at 58.73 versus the euro.The rouble lost ground on Friday after Russia’s central bank cut its key interest rate by a bigger-than-expected 1.5 percentage points to 8.0% and said it would study the need for more cuts as inflation slows and an economic contraction continues for longer than previously expected.Analysts at the Freedom Finance brokerage said on Monday the rouble would likely trade in the 55-57 range against the dollar. “The rouble’s weakening after the rate cut will be short-lived, in our view,” they said. ROUBLE STRENGTHThe rouble has become the world’s strongest-performing currency so far this year, boosted by measures – including restrictions on Russian households withdrawing foreign currency savings – taken to shield Russia’s financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb. 24.Before Feb. 24, the rouble traded near 80 to the dollar and 85 to the euro.The rouble’s strength has vexed officials as it dents Russia’s income from exports of commodities and other goods priced in dollars and euros. The central bank has eased some restrictions, but many capital controls remain in place. Month-end tax payments that usually prompt export-focused companies to convert part of their FX revenues into roubles have supported the currency in the last fortnight. Monday marks the peak of that period. The tax period ends this week, so the dollar-rouble pair passing above 60 cannot be excluded, said Alor Broker in a note. The prospect of Russia reinstating a budget rule that diverts excess oil revenues into its rainy-day fund, as well as the market anticipating currency interventions, are also playing against the rouble.Russian stock indexes were mixed.The dollar-denominated RTS index was down 0.6% to 1,155.0 points. The rouble-based MOEX Russian index was 0.8% higher at 2,113.2 points. More

The writer is president of Queens’ College, Cambridge, and an adviser to Allianz and GramercyAfter eye-popping price drops in the first half of the year and a bit of a bounce in recent weeks, more analysts are recommending higher across-the-board exposure to emerging market assets.After all, the valuation metrics for these markets are at historically cheap levels if you look at indices, both on a standalone basis and relative to developed markets. The bulls argue that, with most disruptive forces now in the rear-view mirror, a period of lower volatility and higher returns is immediately ahead of us.Cheap historical pricing is, in my view, a necessary but not sufficient condition for gainful emerging markets investing, particularly for those with little appetite for volatility.Investors need to take into account both the dispersion of returns within the asset class and economic and financial influences that are yet to play out fully, such as the surge in global inflation forcing major central banks to tighten policies aggressively into a rapidly slowing global economy. And some securities face significant restructuring risk (that is, price drops that are not recoverable with time).A strong general case for emerging markets exposure needs the big macro threats, or what economists call common global factors, either to lift or to be better reflected in valuations.Remember, this is a tricky operating environment for emerging economies, particularly commodity importers. Heightened food and energy insecurity is compounded by slowing global demand, dollar appreciation, a tightening in capital markets’ financial conditions and a tougher landscape for official bilateral aid.Some have argued that this was already reflected in the high volatility and negative returns of the first half of this year. But this assumes that, from here, four factors will not prove problematic.Specifically: that systemically important central banks, led by the Federal Reserve and the European Central Bank, will be able to battle inflation without tipping their economies into recession; that inflation itself will not prove sticky; that more “tourist investors” who have ventured well beyond their normal habitat (and benchmarks) will not take flight; and that the internal social and political fabric of countries will be able to absorb a significant hit from prices of food and necessities.These are not the only assumptions being made by those advocating higher, across-the-board exposure to emerging markets. They are also assuming that, for the most financially-fragile economies, official creditors including the IMF and the World Bank will willingly repeat the burden-sharing disappointments of 2020.To help ease the burden of Covid-related emergencies, they provided significant assistance to emerging countries on the assumption that private creditors would follow suit. Yet the implementation of the Debt Service Suspension Initiative and the formulation of the Common Framework for debt treatment by the G20 were not matched by similar efforts from private sources. If official creditors were to pull back, the lack of aid and debt relief would increase the likelihood of painful cuts in spending on social sectors, aggravate the headwinds to climate change alleviation, fuel greater inequality, and damage actual and potential growth.

This is not to say there are no attractive emerging markets opportunities. But rather than general investing by tracking indices or putting funds in ETFs, investors should focus on selective opportunities with collateral — either assets pledged to creditors or implicit in form such as very large cash cushions or, in the case of sovereigns, large international reserves.Investors should look to acquire good names that have been hit by typical emerging markets technical contagion, distressed assets where recovery values are high and those contaminated by domestic financial market failures.The realities of economic management also underline how investors need to be aware of the sequence of likely events in emerging markets. Faced with high import prices, declining demand for exports and low international reserves, countries tend to opt for currency depreciation to help in financial adjustment and economic restructuring. For several of them, this will keep domestically denominated securities at an inherent disadvantage compared with those issued in hard currency.The time will come for across-the-board exposure to emerging markets. For now, a more selective approach is in order, including via private markets. Investors, though, should be prepared for more bumps in the journey to higher returns.  More

The Federal Reserve is poised to take another dramatic step this week to curb alarmingly high inflation, but the US central bank’s strategy beyond that point is less certain as it weighs a fresh peak in consumer price growth against mounting recession risks.The Federal Open Market Committee on Wednesday is set to confirm market expectations and raise its benchmark policy rate by 0.75 percentage points for the second consecutive month. That will hoist the federal funds rate to a target range of 2.25 per cent to 2.50 per cent, in line with officials’ long-term estimates of a “neutral” policy setting.A series of interest rate rises is planned beyond July, but with nascent signs of consumer distress emerging and tentative forecasts that the worst of the recent inflation shocks have passed, the Fed faces an increasingly difficult task of deciding how to recalibrate its path forward.“What they’ve been doing over the last few months is really trying to grab back control of the narrative, because they’ve taken a huge amount of flak for being too slow to start raising rates and too slow to recognise the strength of the economy,” said Ian Shepherdson, chief economist at Pantheon Economics. “But if they keep banging away with [0.75 percentage point rate rises] into the fall, I’d get really worried that that would be overkill.”Wednesday’s decision marks the next phase of the Fed’s campaign to “front-load” its monetary tightening and “expeditiously” get interest rates to a level that no longer stimulates growth, having already broken precedent and moved well beyond the quarter-point adjustments typical of past hiking cycles. At one point following the release of alarming inflation data this month, market participants ratcheted up bets that the central bank would even raise rates by a full percentage point. However those odds dropped days later as Fed officials signalled their preference for another 0.75 percentage point adjustment for the meeting.The central bank’s decision to aggressively raise rates in quick succession stemmed from what it deemed was an urgent need to cool down the economy and ensure that expectations of future inflation remain in check.Despite inflation reaching new heights, the red-hot housing market has cooled dramatically, business activity across the country has slowed and several high-profile companies have shelved hiring plans or announced lay-offs.Many economists now forecast a recession in the next six to 12 months, with momentum in the labour market ebbing and eventually leading to job losses that will push the unemployment rate closer to 5 per cent, according to some estimates. It currently stands at 3.6 per cent.Notably, no policymaker has yet pencilled in an economic contraction, but many officials — including Fed chair Jay Powell — have conceded that the path to achieving a “soft landing” has narrowed considerably.“The risks surrounding the economic outlook are becoming more two-sided in my view, but the Fed’s policy rhetoric is still fairly one-sided in terms of its focus on inflation,” said Brian Sack, director of global economics for the DE Shaw group and a former senior Fed official.“The Fed’s hawkish policy message and aggressive rate changes to date have been productive, but I anticipate the need to move to a more balanced policy message and a slower pace of tightening later this year,” he added.After this month’s gathering, the Fed next convenes for a policy meeting in September, when policymakers are expected to either raise rates by another 0.75 percentage points or downshift to a half-point adjustment. By the end of the year, the fed funds rate is projected to surpass 3.5 per cent at the very least.

How quickly the Fed gets there will depend on the data. Oil and other commodity prices have dropped from recent highs, which will help to ease some of the upward pressure on headline inflation figures. But a rise in rents and other services-related costs threaten to offset this, heaping pressure on the central bank to not ease up on its tightening programme.“They have taken full responsibility for inflation, and yet the inflation that they’re trying to bring down with monetary policy tools has causes that are not monetary in nature,” said Dennis Lockhart, former president of the Atlanta Fed. “When you’re in that situation, you might be tempted to try harder.”Lockhart warns there is now a greater risk that the Fed goes on “too long” and does “too much”.With a recession now “probable” and consumers beginning to feel the pinch of higher borrowing costs, according to Diane Swonk, chief economist at KPMG, the Fed’s job is set to become much more challenging. “It’s one thing to feel the pain of inflation,” she said. “But then you add on top of that that inflation is going to come down, but not in the way that it doesn’t distort [people’s] lives, at the same time that unemployment is going up. That’s when it gets really hard.” More

Last year, the Covid pandemic accelerated the use of new technologies across every business sector — as companies rushed to find ways to serve their customers, and deploy their staff, safely.But, in 2022, as health restrictions lift, technology needs to be applied to a new set of commercial challenges: managing supply chain and inflationary pressures linked to Russia’s invasion of Ukraine; coping with logistical and staffing problems caused by Covid and Brexit; and trying to reduce climate risks by hitting green targets. Do you know of companies that have been rising to these challenges? If so, please nominate them for the Financial Times’s “Tech Champions of 2022” project.In conjunction with Workday, we aim to showcase UK and European businesses, and other organisations, that are using technology to adapt to new risks and opportunities.Last year’s Tech Champions project focused on businesses making a pivot in the pandemic but, this year, we seek examples of innovation that can help overcome the latest problems posed by geopolitical and economic conditions.Nominations are now open and can be submitted by filling in a very short online form. FT journalists will also contribute to the process, research the entries, and help to draw up a shortlist. A panel of judges will then study the companies nominated and select the best examples from different sectors, naming them “Tech Champions of 2022”. We invite entries from the following sectors:

Sector categoriesBanking & PaymentsMarkets & Financial ServicesShipping & TransportManufacturingProfessional ServicesRetailHospitalityIT & CybersecurityMediaHealthcare

Those companies and organisations selected as “Tech Champions of 2022” will be showcased online and in a magazine in November.

Accompanying articles will profile them and their senior management — and examine their approach to innovation, their perseverance, and their technical ingenuity.To make a nomination, please click this link to our short online entry form, which takes less than a minute to fill in. There is no limit on entries — readers may make multiple nominations, across all of the sectors. The closing date for entries is September 2, 2022. More

SINGAPORE (Reuters) – The dollar was on a firm footing on Monday, as traders brace for a sharp U.S. interest rate hike this week and look for safety as data points to a weakening global economy.The greenback was up slightly against most majors early in the Asia session, trading at $1.0195 on the euro and steadying Friday losses to buy 136.57 Japanese yen.The U.S. Federal Reserve concludes a two-day meeting on Wednesday and markets are priced for a 75-basis-point (bp) rate hike, with about a 9% chance of a 100 bp hike.”Market reaction will turn on how hawkish Chair (Jerome)Powell sounds with his determination to reduce inflation in the face of slowing growth,” said National Australia Bank (OTC:NABZY) currency strategist Rodrigo Catril.U.S. growth data is also due out Thursday, though markets have already been rattled by a slew of soft business indicators in Europe, which snuffed out a rally in risk assets on Friday.An energy crisis also hangs over the euro, while the trade-sensitive Australian and New Zealand dollars, which made one-month highs on Friday, have backed away.The Aussie edged about 0.5% lower to $0.6892 and the kiwi was down by the same margin to $0.6223. [AUD/]Australian consumer price data is due on Wednesday and a hot number could lend support by ramping up bets on rate hikes, though analysts warned the backdrop was mostly negative.”The Australian dollar will mainly be a function of the world economic outlook,” said Commonwealth Bank of Australia (OTC:CMWAY)’s head of international economics, Joe Capurso.”The darkening outlook suggests the Aussie has more downside than upside risk and can test $0.6800 this week.”Sterling also slipped on Monday, even as markets reckon on a 60% chance the Bank of England would lift rates by 50 bp next week. It was last down 0.3% to $1.1970.Bitcoin hovered at $22.278. The dollar rose 0.4% to buy 0.9641 Swiss francs. The U.S. dollar index sat at 106.840, just below a two-decade high made in mid July at 109.290. More