Equities dive ahead of FOMC decision

Traders took profits from the recent massive rally in equities and the SP500 index and Dow Jones indices were trading sharply lower on Wednesday, down two days in a row, while the Nasdaq 100 index continued to march higher after breaching the 10,000 USD threshold. 

Earlier in the day, traders paid attention to the US CPI data for the month of May. After plunging in April, economists expected the deflationary impulse in consumer prices to stabilize in May and it did with the headline and core CPI both falling just 0.1% monthly (expectations were 0.0%). 

This sent the headline CPI growth lower (to just +0.1% YoY) and core CPI grew at +1.2% YoY - the slowest since 2011.

Investors are now bracing for the FOMC decision, which is due later in the day. The Fed needs to sound dovish in order to keep equities from falling as too much hope for more stimulus had been priced in already. If the Fed disappoints the markets, we could see a sharp correction in indices. 

In FX, the dollar was trading lower against other major currencies, but the EURUSD pair remained stuck in a narrow range near 1.1350. The USDJPY pair dropped another half a percent today to trade at around 107.20.

Oil was stronger today and the WTI benchmark edged 0.80% higher during the US session. 
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