The Federal Reserve is expected to hold interest rates at this week's gathering but traders will be poring over the post-meeting statement for an idea about their plans for 2024
The Federal Reserve is expected to hold interest rates at this week's gathering but traders will be poring over the post-meeting statement for an idea about their plans for 2024 AFP

Stocks tracked Wall Street higher and the dollar retreated Tuesday as traders awaited a bumper round of market-moving events, starting with the release of US inflation data later today.

The consumer price index reading comes a day before the US Federal Reserve's final policy meeting of the year, which will be closely followed by investors hoping for an idea about decision-makers' plans for interest rates.

A string of data pointing to a slowdown in inflation and a softening of the labour market -- but at a pace suggesting the economy will not tip into recession -- has seen a surge in bets on the central bank cutting borrowing costs as much as four times in 2024.

"Investors sense they are nearing touchdown on the soft landing economic glide path, positioning for a benign inflation print or at least one that won't upset the market's bullish dynamics" ahead of the Fed meeting, said SPI Asset Management's Stephen Innes.

As well as the CPI figures, traders are also awaiting the release of data on US producer prices, retail sales and manufacturing.

Fed officials, including boss Jerome Powell, have insisted for months that although inflation continues to come down they will still keep rates elevated for some time and be guided only by data.

"There's so much to come over the next few days," said Craig Erlam of OANDA.

"The Fed decision on Wednesday is unlikely to be controversial, but the forecasts, dot plot (of rate projections) and press conference that accompany it may well be."

Wall Street traders provided a healthy lead, with all three main indexes closing higher, including the Dow ending at its highest level in two years.

In Asia, Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Mumbai, Singapore, Taipei and Jakarta were all in positive territory.

Charu Chanana, at Saxo Markets, said: "This could be a monumental week for Asian markets if US CPI data and the Fed re-confirm that the rate hike cycle has ended."

London opened higher as the latest UK unemployment data boosted hopes of a cut to British interest rates by the middle of next year.

Frankfurt extended its gains after a record finish Monday, while Paris was also higher.

The European Central Bank and Bank of England are also due to announce policy decisions this week.

The yen edged back against the dollar after tumbling Monday on reports that the Bank of Japan saw no immediate need to tighten monetary policy.

The currency has swung sharply over the past week after hitting a four-and-a-half-month high on comments from officials including governor Kazuo Ueda that were taken as hints they could end the long-running negative interest rates policy next week.

The greenback was also down against most other currencies, including the euro, pound, Australian dollar, South African rand and South Korean won.

Tokyo - Nikkei 225: UP 0.2 percent at 32,843.70 (close)

Hong Kong - Hang Seng Index: UP 1.1 percent at 16,374.50 (close)

Shanghai - Composite: UP 0.4 percent at 3,003.44 (close)

London - FTSE 100: UP 0.3 percent at 7,566.80

Dollar/yen: DOWN at 145.42 yen from 146.09 yen on Monday

Euro/dollar: UP at $1.0778 from $1.0761

Pound/dollar: UP at $1.2570 from $1.2562

Euro/pound: UP at 85.75 pence from 85.72 pence

West Texas Intermediate: UP 0.7 percent at $71.83 per barrel

Brent North Sea crude: UP 0.7 percent at $76.53 per barrel

New York - Dow: UP 0.4 percent at 36,404.93 (close)