Fed Cuts Growth, Leaders Pepper Greece, Aussie Sales Next

The Fed cut long-term growth forecasts on Wednesday as the situation in Greece deteriorated. The market reflected the numerous confused and often contradictory headlines out of Greece as the odd grouping of NZD, GBP and USD were the worst performers while CAD and EUR led. Australian retail sales are coming up in Asian trading. See our LATEST TRADES on AUDNZD & EURUSD ahead of Aussie retail sales.

International leaders appear to have lost patience with Greece as calls reigned down to put the situation in order. The EU and IMF said the aid tranche that was scheduled to be paid immediately was pulled off the table. Another report said China has nixed the deal to contribute to the EFSF.

The voluntary haircut to Greek bonds also appears in jeopardy with Reuters reporting that Greek debt holders may be forced to take the haircut, something that will trigger CDS. The referendum may come as soon as Dec 4 with Dec 11 as another option.

So far havent seen any recent polls analyzing how Greeks may vote but in the near-term these polls will be major market movers.

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The FOMC statement was mostly unchanged with a slight nod to the positive growth surprise in Q3. The latest Fed growth artists featured deep downgrades to future growth and employment.

The 2011 GDP forecast was knocked down to 2.5-2.9% from the June forecast of 3.3-3.7% and the 2013 forecast was downgraded along the same lines. The unemployment forecast was hiked to 8.5-8.7% from 7.8-8.2%.

In Bernankes press conference he was surprisingly dovish and said he would consider buying mortgage bonds if conditions are appropriate, weighing on the US dollar and boosting risk assets.

The S&P gained 1.6% to 1238. Gold climbed $18 to $1730.

Early in the Asia-Pacific session, New Zealand Q3 unemployment rose to 6.6%, missing the 6.4% consensus and sending NZD 40 pips lower.

Asia-Pacific Preview

The top event of the session comes at 0430 GMT when Australia releases retail sales data for September and Q3. Expectations are for rises of 0.4% and 0.6%, respectively.