Upbeat consumer confidence data in the United States, ahead of a widely anticipated rise in interest rates, supported the dollar on Wednesday, while Asian tech shares matched strong gains in their U.S. peers. Spot gold and oil prices were steady after sharp falls in U.S. trade as the policy-setting Federal Open Market Committee began its rate-setting meeting. Asian technology shares jumped to match a 2.1 percent rise on the Philadelphia Semiconductor Index <.SOXX>. Taiwan Semiconductor Manufacturing (TSMC) <2330.TW> bolted more than four percent higher, in line with a rise on its U.S. listing , and South Korea's Samsung Electronics <005930.KS> gained 1.4 percent. U.S. rates are expected to be raised by a quarter percentage point from a 46-year low of one percent at the end of the meeting on Wednesday.
"I think they've set the market up for 25 points, and they're going to do 25 points," said Henry Herrmann, chief investment officer at Waddell & Reed. "The interesting thing will then be what they say in the phraseology about, most importantly, inflation." The dollar was strong in Tokyo, but trade was muted as investors saw little incentive in taking aggressive positions ahead of the Fed's decision. At 0215 GMT, the dollar was trading at 108.48 yen , slightly up from late New York levels around 108.22. The euro bought $1.2094 , up slightly from levels in late New York. Japanese shares were flat as profit-taking hit recent gainers ahead of a key corporate poll on Thursday that is expected to confirm improving business sentiment. But falls were limited by advances in shares of some technology and software firms, such as Sony Corp <6758.T> and Oracle Corp Japan <4716.T>. The Nikkei average <.N225> ended the morning flat at 11,860.89 after falling as low as 11,808.13. An MSCI index of non-Japan Asian share markets <.MSCIAPJ> was up 0.6 percent.
DISCOUNTING DATA, FED
A strong reading in the Bank of Japan's quarterly "tankan" survey of corporate sentiment, due on Thursday, has been mostly priced in, and a lack of other buying incentives means investors are hurrying to lock in profits for now, analysts said. In the United States, consumer confidence hit a two-year high in June, surpassing market expectations and fuelling the dollar's early rise in New York. Markets are now focused on June non-farm payrolls, due on Friday, which are thought to have risen to 250,000 after May's 248,000 increase. The Dow Jones industrial average <.DJI> gained 0.54 percent to 10,413.43. The Nasdaq Composite Index <.IXIC> rose 0.75 percent to 2,034.93. In the bond market, the more cheerful mood of consumers did not affect expectations that the Fed will raise interest rates on Wednesday. "It goes to show that the market had gone a long way toward pricing in the Fed and discounted a lot," said David Ging, fixed-income strategist at Credit Suisse First Boston. In Asia, the benchmark 10-year Treasury note was unchanged after rising 12/32 to 100-15/32 for a yield of 4.69 percent in New York, down from 4.74 percent on Monday. Crude oil futures were up a touch at $35.75 a barrel, after settling 58 cents, or 1.6 percent, lower at $35.66 in New York. Gold prices fell on the market's failure to hold near Monday's 10-week high, after hurdling the psychological $400 mark last week. Spot gold was at 392.75 after falling around $8 in New York, where it was last quoted at $392.00.///