Fed, ECB Meetings on Schedule Today

Elsewhere, industrial production increased by 0.7% on an annual basis in May, contrary to the market estimate for a 0.7% decline, according to statistics from China earlier in the day. Retail Sales also fell by 6.7% over the same time period, although this result was better than analysts had predicted a dip of 7.1%.

Focus on central banks

Later on Wednesday, the ECB's Governing Council will meet informally to address the recent decline in government bond markets, which brought their yields to multi-year highs. The euro managed to jump some 50 pips following the news.

However, the most focus will be on the Fed's monetary policy decision, due later in the evening. 

A 50 basis point (bps) Fed rate increase is what the market anticipates. However, the recent inflation data lay the basis for a 75 bps increase, and the CME Group FedWatch reveals that markets are currently pricing in a 90% likelihood that the Fed will raise its policy rate by a total of 150 bps at the following two meetings.

However, there are whispers that the Fed might opt for a 100 bps hike, although that seems hard to imagine. We will see tonight.

Ahead of the Fed meeting, US stocks are trying to remain somewhat resilient as yesterday's trading ended flat for US indices. Nevertheless, volatility is expected to gradually increase heading into the FOMC announcement.