Archived IMT (2010.03.16)

FOMC kept all rates unchanged, while Kansas Fed's Hoenig remained the sole dissenter against the view of exceptionally low federal funds rate for an extended period? The knee-jerk reaction was for the USD to drop (after low rates mantra was kept), but equities are unable to return to the session highs as is the USD is stabilizing. Oil settles at $81.70, while gold hovers around at $1123. S&P500/VIX ratio at 65.5, which is consistent with 2 or 3 daily rebounds towards 65-66 before a subsequent retreat as was the case in mid Jan. CAD was the biggest gainer vs. USD, USDCAD support seen standing at 1.0120, while CADJPY may exploit further yen weakness but resistance standing at 89.50. Were NOT abandoning our expectations for a Chinese rate hike to occur this month. EURUSD still fails to break above $1.38 and USDX remains well above the 79.20 channel support. Wednesdays Bank of Japan decision could drag JPY further, supporting our calls for 91.80 in USDJPY.