Global Markets React to Upcoming Fed Decision

Global shares and the U.S. dollar edged up on Wednesday as investors made last-minute adjustments to portfolios ahead of the U.S. Federal Reserve's decision on interest rates. The dollar reached multi-month and even multi-year highs against a range of currencies, including the Australian, New Zealand, and Canadian dollars.

The Fed is expected to cut rates by a quarter point, but to signal a cautious approach to loosening monetary policy next year. S&P 500 futures were up 0.2%, suggesting a small rise at the opening bell later.

Automaker Stocks Gain on Honda-Nissan Talks

Automaker stocks were also in focus, with news of potential tie-ups between Japanese rivals Honda and Nissan lifting car stocks. French manufacturer Renault, which owns a large stake in Nissan, saw its shares rise more than 6%. Paris' CAC 40 was up 0.2%, roughly in line with the STOXX 600.

Dollar's Performance and Market Expectations

The dollar has risen 1.13% against a basket of six other currencies this month, marking its strongest performance for December since 2014. Traders are almost certain the Fed will move the funds rate window 25 basis points lower, but lift its long-run interest rate projections.

"Markets will focus on two things. The key message has been telegraphed: you'll certainly get a cut. But you'll get a 'hawkish cut', in the sense that they will communicate and guide for a slower pace of cutting to a higher terminal rate," explained Samy Chaar, economist at Lombard Odier in Geneva.

Oil prices also edged up ahead of the anticipated rate cut from the Fed, as lower borrowing costs can stimulate demand for fuels. Brent crude was up 0.5% at $73.57 a barrel.