Happy hump day.
The Fed spoke, the commentators commented, and the market? well, the market made its statement too.
First noticed was the reaffirmation of “exceptionally low” interest rates for “an extended period” - no change there. However, the Fed did go on to say that the economy is still picking up adding that"deterioration in the labor market is abating". Emergency liquidity programs, put in place to prop bonds and asset backed securities, will expire as scheduled in the first quarter of 2010.
The S&P slowly but surely gave back most of its gains for the day following the Fed's release. In the currency markets, USD pairs traded sideways, trying to pick a direction while digesting the Fed's comments. A very clear direction was finally chosen early in the Asian trading session and the USD came out a winner, crushing most of its trading partners. Even the Aussie came tumbling down to levels not seen in 44 days. The EUR took a beating in just about every pair. But against the dollar it dropped like a rock - breaking through one support level after another. It is currently trading at 1.4400, down 740 pips in 14 days - wow.
So once again, it's all relative. Take dovish comments from the RBA, mix with lingering debt concerns in Europe, a struggling economy in the UK, and some mildly upbeat comments from the Fed, and the USD is king - at least for the time being (and not for long if you ask Goldman)
PS - Please feed my fish - just click anywhere on the water
PPS- Feel free to leave comments if you like (or not) what you read here and if there's anything in particular you'd like to see discussed -
Thanks!
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