FUNDAMENTAL ANALYSIS

Dollar drops before Fed; Swiss franc sharply lower
The dollar edged lower on Tuesday on expectations the Federal Reserve would adopt further easing to stimulate a slowing economy but analysts said such a move may not be negative for the U.S. currency.
The Swiss franc weakened sharply after growth and trade data showed a growing impact on the country's economy from a strong currency, fueling speculation the Swiss National Bank may lift the floor for the euro versus the franc.
The Federal Open Market Committee, the Fed's policymaking arm, is expected to end its two-day policy meeting on Wednesday with a decision to stock up on longer-term Treasury debt to push longer-term rates lower in a move dubbed "Operation Twist."
Additional monetary stimulus, especially in the case of quantitative easing, in which the Fed buys government bonds for its balance sheet, is often seen as negative for the currency as it increases dollar liquidity and boosts risk appetite.
 But analysts said the impact on the dollar from an "Operation Twist" should be limited given it doesn't expand the Fed's balance sheet. Such a move has also already been priced in, which should minimize market volatility.
The dollar index, which tracks the greenback's value against a basket of other major currencies, was last down 0.2 percent to 76.985 <.DXY>.

Wall St ends flat as early gains evaporate
U.S. stocks ended little changed on Tuesday as investors waited to see if the U.S. Federal Reserve would offer more economic stimulus and if Greece made progress in talks to avoid a default.
In the lowest volume session since late August, the market gave up earlier gains of about 1 percent as investors were wary of going home with long positions after an overnight downgrade of Italy's credit rating.
Semiconductors were among the worst performers with the PHLX semiconductor index <.SOX> off 1.3 percent, dragging the Nasdaq down, after Xilinx cut its second-quarter outlook. Shares of the chipmaker fell 4.5 percent to $30.03.
At the end of its two-day meeting on Wednesday, the Fed is expected to announce plans to intervene in the bond market to push long-term interest rates -- already near historic lows -- even lower in a move known as Operation Twist.
 The Dow Jones industrial average <.DJI> gained 7.65 points, or 0.07 percent, to 11,408.66 at the close. The Standard & Poor's 500 Index <.SPX> fell 2.00 points, or 0.17 percent, to 1,202.09. The Nasdaq Composite Index <.IXIC> lost 22.59 points, or 0.86 percent, to 2,590.24.

Gold rebounds, up most in over a week on Fed hopes
Gold jumped to its biggest gain in eight sessions on Tuesday, snapping back from steep day-ago losses as the anticipation of further U.S. stimulus mingled with new fears over global growth.
 In a jittery session marked again by gold trading less like a safe haven and more like a risky commodity, bullion rallied in the U.S. mid-morning following downbeat forecasts from the International Monetary Fund, and held gains later in the day even as stocks pared increases and the U.S. dollar rose.
 It drew some strength from a poll at the world's biggest bullion conference showing gold is forecast to rise to $2,019 an ounce by November 2012. Expectations of softening policy from the U.S. Federal Reserve on Wednesday also lent support.
The day's wide trading range and thin volume -- 40 percent below the one-month average for U.S. futures -- highlighted the volatility that has plagued gold for the past month, tainting its image as a haven of stability and safety.
By 2:30 p.m. EDT (1830 GMT), gold's spot price <XAU=>, which tracks trades in bullion, was above $1,802 an ounce, after rallying to more than $1,810. Its last registered trade on Monday was $1,777.64.
U.S. gold futures' most-active contract, December <GCZ1>, settled up $30.2, or 1.7 percent, at $1,809.10, after trading between a high of $1,814.30 and a low of $1,772.


Oil rises, but stocks sputter on Fed jitters
Expectations that the Federal Reserve will act to boost the U.S. economy drove up oil prices on Tuesday, but equities lost steam on caution over what the Fed will actually announce when its policy meeting ends on Wednesday.
Wall Street gave up gains of about 1 percent heading into the close as a wary mood gripped the market following the overnight downgrade of Italy's credit rating by Standard & Poor's.
The Fed is expected to unveil a program to buy longer-dated bonds in a bid to keep already-low, long-term interest rates low, if not lower, in a move known as Operation Twist when its two-day policy meeting ends on Wednesday.
The expected new Fed program would further ease U.S. monetary policy, a move that left bond traders anxious considering the European debt crisis is far from being resolved.
Brent crude bounced back a day after suffering heavy losses, partly on expectations U.S. inventory data will show a drawdown in stockpiles.
In London, Brent crude <LCOc1> settled up $1.40 at $110.54 a barrel.The U.S. crude contract for October <CLc1>, which expired at the close, settled up $1.19 at $86.89 a barrel. The more heavily traded November contract gained $1.11 to settle at $86.92 a barrel.

Nikkei may slip, trade seen rangebound
The Nikkei average could open lower on Wednesday but is expected to stick to a narrow range as investors await the outcome of a the U.S. Federal Reserve's two-day policy meeting, at which it is expected to take further easing steps. 
Nikkei futures in Chicago ended at 8,630, down 20 points from their Osaka <JNIc1> close of 8,650. Analysts said the Nikkei is expected to trade between 8,650 and 8,750 on Wednesday.
Worries about the European sovereign debt crisis continue, but eased for the near-term after Greece promised further cuts to its public sector before a second conference call with international lenders, whom Athens must persuade to extend more loans to avoid bankruptcy next month.
The Nikkei <.N225> dropped 1.6 percent on Tuesday to 8,721.24 after a market holiday on Monday. The benchmark slipped below its 25-day moving average of 8,791, only one session after it had risen above the mark for the first time since early August.
The broader Topix index <.TOPX> declined 1.7 percent to 755.04 on Tuesday.

Seoul shares seen moving narrowly
Seoul shares may trade within a limited range on Wednesday as investors are likely to wait and see if the U.S. Federal Reserve would offer more economic stimulus and if positive progresses are made in Europe.
At the end of its two-day meeting on Wednesday, the Fed is expected to announce plans to intervene in the bond market to push long-term interest rates -- already near historic lows -- even lower.
Meanwhile shares in POSCO <005490.KS> may be tracked after the world's No.3 steelmaker acquired shares held by Thainox Stainless' <INOX.BK> president and his family, lifting its stake to 75 percent from 15 percent.
The Korea Composite Stock Price Index (KOSPI)<.KS11> finished up 0.94 percent at 1,837.97 on Tuesday.
While the stock market rallied slightly, other Korean assets such as the won and bond futures were dumped again by foreign investors, triggering concerns over capital flight from one of Asia's most open and vulnerable economies to risk aversion.

HK shares expected to open marginally lower
Hong Kong shares could edge lower at Wednesday's open with volume likely to stay lackluster as investors await the outcome of a U.S. Federal Reserve meeting later in the day when the Fed could announce further stimulus measures.
That could boost a market that has been hit by slowing global growth and the lingering euro zone debt crisis, shaving more than 17 percent off the Hang Seng Index so far this year.
The Hang Seng Index <.HSI> closed up 0.5 percent at 19,014.8 points on Tuesday, led by strong gains in defensive names that have outperformed the broader market, closing near session highs after nearing lows recorded last Wednesday.
Elsewhere in Asia, Japan's benchmark Nikkei <.N225> was trading almost flat at 8,718.2 points, while the Korea Composite Stock Price Index (KOSPI)<.KS11> was trading down 0.1 percent at 1,839.6 points at 0057 GMT.
Source : Reuters