The FOMC two day decision making event ended late on Wednesday with a surprisingly positive statement. Today Janet Yellen will address the markets. The
The FOMC two day decision making event ended late on Wednesday with a surprisingly positive statement. Today Janet Yellen will address the markets. The FOMC slightly revised the language in their statement to give a rosier outlook at the US labor market and the overall recovery. Interest rate increases were now openly mentioned. Trader’s reactions were completely predictable. The US dollar soared to trade at 86.17 while gold tumbled to 1212.00. All major dollar crosses tumbled against the stronger greenback.
Within minutes of the reaction the Reserve Bank of New Zealand concluded its rate and policy meeting. The strength of the U.S. currency was a blow to the New Zealand dollar, which tumbled on a softening stance over future interest rate increases by the Reserve Bank of New Zealand. The NZD is trading at 0.7800 virtually flat this morning. New Zealand’s central bank held its benchmark rate at a five-and-a-half year high on Thursday, but dropped its explicit tightening bias, as it renewed its attack on the high level of the currency. The kiwi has slid about 10 percent against the dollar from its three-and-a-half year high in mid-July. The kiwi’s cousin, the Aussie is also in the red at 0.8778. The Australian dollar lost nearly 1¢ on the announcement and is down 0.86 per cent to US87.78 after falling sharply as the greenback gained. US major stock indexes closed lower, while the yield on 10-year treasuries climbed 5 basis points to 2.35 per cent. Australian 10-year yields followed suit and rose from 3.31 per cent to 3.40 per cent.
Remaining in Asian, the Japanese yen fell to trade at 109.01 adding 10 points in the session. Speculation about the Japanese Pension Funds new strategy has held
The euro tumbled against the dollar to trade at 1.2625 after the US Fed statement. Euro traders will closely monitor today’s German employment numbers as the continued pressures from the eurozone crisis is weighing heavily on the German economy. Traders will also get a look at Spanish GDP.