Fed forecasts set to be the market focus

U.S. shares are set to open flat as traders await the outcome of the Federal Reserve's final policy meeting of the year.

With financial markets pricing in a quarter-point rate hike as a near-certainty, more interest will focus on what Fed officials say about the outlook given low unemployment and the prospect of higher inflation in light of the recent rise in oil prices.

At present, the futures markets are pricing in another two interest rate hike next year.

Neil MacKinnon, global macro strategist at VTB Capital, says anything to suggest more than this would be interpreted as tilting the Fed to "a hawkish bias," especially if accompanied by a significant upgrade to inflation forecasts.

Anything hawkish could weigh on stock markets, already at record-highs, but give a further lift to the dollar.