According to the FOMC Minutes, released a few minutes ago, the Fed staff  projected GDP would decline this year and  ”rise at a pace slightly above the rate of potential growth in 2010.” Yet what seems more important, they expect the unemployment rate to rise “significantly” into 2010, to a rate even higher than it projected in late October, and inflation at too low levels, and persisting for a time. No matter what, this does not seem very good for greenback at the moment, with Euro above 1.3500 and all majors pushing higher against dollar. Yet we are almost at the end of the American session, so take notice we could see more interesting reactions later on in the Asian session and even tomorrow at the beginning of European one. Uncertain times are far from over in the world economy, and despite whatever you are seeing right now, remember the global recession we were talking about a month ago has certainly don’t changed. Economies don’t heal in months, but more likely in years: no time for long time bets yet.

The Federal Reserve has slashed the funds rate not just with a 0.75 basis points but in fact to a range between 0.00% and 0.25%  to combat recession, starting a new phase for economic policy, keeping rates “exceptionally low” and with lending programs financed by the Fed’s ballooning balance sheet. Also called quantitative easing, Bernanke said that with such low rates, a new weapon is needed to ensure growth and there it is the provision of liquidity. In the meanwhile majors rose against greenback and become closer to probable break levels, (except by GBP that by the way, gave the expected 100 pips rally). Tomorrow I will add longer term charts view, to see if we can decide whether this is a correction, or a renewed dollar bearish rally.

See you then!

I will be covering the FOMC decision live at Fxstreet.com home page.

See you there!