Posted Sep 18, 0:10

Dollar Rips as Market Eyes Fed Forecasts

2 hours ago: 

The Fed failed to deliver any kind of significant change in rhetoric but forecasts that showed a more aggressive path of rate hikes sparked a large US dollar rally. The Australian dollar was hit hardest as it tumbled to 0.8951. Japanese trade data is due later but all the focus is on the SNB and Scottish referendum.  In our Premium Insights, the 3rd $USDCHF long hit its final target of 0.9400 from the 0.9180 entry for 220 pips. The  NZDCAD Premium short from 3 weeks ago hit it's final 0.8940 target for currently 180 pips. Our existing CADJPY longs are currently netting over 90 pips.  All these trades with their charts and rationale are in the Premium Insights. The main Fed focus ahead of the decision was on the inclusion of the words “significant slack” to describe the labor market and “considerable time” to describe when the first rate hike would come after QE3. Neither was altered as the doves remained in control.

However, the hawks made some progress with Fisher adding his dissent to Plosser's and 14 members now expecting a hike in 2015, up from 12. But perhaps the most notable change was in the dot chart as the median estimate for the end of next year rose to 1.375% from 1.125%.

PREMIUM INSIGHTS Update: Sep 16, 20:04
FOMC Triggers USA Trifecta Sep 17, 2014 21:31: 

A rallying trifecta in the US dollar, equity indices and bond yields emerged after the FOMC issued slightly more hawkish projections on the Fed Funds rate. 14 of the 16 Fed members expect a rate hike in 2015, but more importantly, the median estimate for the Fed Funds rate by end of 2015 is now 1.375% from 1.0% in the June projections. Red-line comaprison of FOMC statement and dots forecasts are here.


The Dragon Awakes, Fed and Indyref in Focus Sep 17, 2014 0:22: 

The theme early in the week was that Chinese officials were reluctant to react to softer growth but that proved to be wholly untrue as the PBOC injected 500 billion yuan in a surprise move. The US dollar sank on the headlines and dovish commentary from Hilsenrath. The Canadian dollar was the best performer after Poloz said a domestic pickup appears underway. 2 new GBP Premium trades and charts have been added ahead of Wednesday's triple releases and Thursday's referendum on Scottish independence. All latest trades & charts are found in the Premium Insights.  Fears that China wanted to wring out some of the excesses in the lending sector were put to sleep by the massive injection from the PBOC into the 5 largest lenders. It's good news that officials are willing to act but it's also worrying that they felt the need to react so strongly.