LONDON (Reuters) - World stocks inched higher on Wednesday after two days of losses but remained pinned down by the dollar’s recent surge and expectations that a U.S. Federal Reserve meeting later in the day will signal further policy tightening ahead.
Forecast-beating results from U.S. tech giant Apple helped lift shares in technology shares worldwide, but with investor focus firmly on the Fed, equity futures were tipping only a marginally firmer open for Wall Street later in the day.
Currency markets have been in the limelight this week, with the dollar roaring higher to erase all year-to-date losses versus a basket of currencies. It stands now at 3-1/2 month highs on growing signs the Fed will be the only major central bank to raise interest rates in the coming months.
Dollar surges vs G10 FX: reut.rs/2rcDMiF
In contrast to the United States, where inflation and growth indicators have generally surprised to the upside, rate rise expectations elsewhere have receded after a string of disappointing economic data.
Expectations of a Bank of England rate hike this month have virtually been priced out, while the European Central Bank as well as central banks in Japan, Switzerland and Sweden have all hinted that policy tightening remains some way off.
The Fed should announce at 1800 GMT that it is holding interest rates steady but will likely encourage expectations of an increase in borrowing costs in June. Those expectations were strengthened after a survey on Tuesday suggested inflationary pressures were building.
“It is this concern around inflation and the robustness of the U.S. economy that is likely to dominate when the Fed