FED did not disappoint markets: the announcement that they will slow the pace of treasuries purchases, finishing by the ends of October, has triggered a strong dollar rally across the board. Also FED leaved rates unchanged, and reaffirmed that they will stay “exceptionally low for an extended period. Finally there will be no changes to the $1.45T mortgage security purchase plan.
Eur/Usd reached 1.4120 while Gbp/Usd hit 1.6425. Both pair are rebounding strongly form those zones, approaching to pre FOMC levels. Usd/Jpy reached 96.76, exactly the 61.8% retracement of the last fall measure from 97.78 to 95.12, and fall sharply now struggling to regain the 96.00.
Stocks went slightly down yet at this point, sustain previous gains and barely react to the announcement to finally break above daily highs.
Market will take a couple of hours to digest the new and settle down, but at the end the reading is quite dollar positive, as in one way, this is a confirmation that the severe recession is either already over or will be very soon.
Hope to see you back later today, at 22:30 GMT at the daily Wrap Up Webinar, and we could discuss what will happen in Asian session. Here is the link:
http://www.fxstreet.com/live/sessions/session.aspx?id=29d86e33-b7dd-432a-939d-b376c379e761
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