Morning Bid: All eyes on how Warsh walks the line

A look at the day ‌ahead in European ​and global ​markets from Tom Westbrook

Kevin Warsh wraps up his first Federal Open Market Committee meeting with tumbling oil prices and a tentative peace offering a ‌helpful backdrop for leaving interest rates on hold, as traders expect.

Market focus ⁠will be on how he votes, his news conference and how he navigates explaining the outlook.

Warsh is ‌not a fan of "forward guidance", ‌and may choose to refrain from offering a projection for interest rates as part of the quarterly economic outlook the U.S. central bank publishes.

But he was picked by ​U.S. President Donald Trump to cut rates and, with inflation above target and employment solid, markets expect a hike. So he will be asked about it and ⁠the dollar has been dithering this week, waiting to hear from him.

If he does not push back on market ​pricing, investors might take that as a hawkish signal. But if he does, then investors might worry about inflation - leaving a delicate task.

He'll ​also have to face a boardroom where his ‌predecessor, Jerome Powell, still has a vote.

Perhaps the Bank of Japan's Deputy Governor Shinichi Uchida offered a template of a steady hand on ⁠Tuesday. He managed to preserve policy flexibility without spooking markets.

Uchida did have a bit of extra help from Japan's finance ministry, which is lurking just off-stage with threats to intervene in the ⁠currency market, should the yen fall again.

Asian markets traded mostly sideways on Wednesday, with Warsh the main ​show in town and sellers of oil taking a breather to wait for confirmed details of the U.S.-Iran agreement.

Brent futures have sunk below $80 a barrel on reports the U.S. plans lifting sanctions on ‌Iranian oil. Other than the Fed show on Wednesday, Sweden's Riksbank is expected to be on hold but signal a hike could ‌be coming later this year.

British inflation is seen creeping up to 3% thanks to higher oil ⁠prices, while final European readings are ‌not expected to deviate ​from preliminary figures.

Key developments that could influence markets on Wednesday:

- Rate decisions in the U.S. and Sweden

- British inflation

- U.S. retail sales data

(Editing by ‌Muralikumar Anantharaman)

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