FOREX NEWS | CURRENCY NEWS BY FOREXLIVE

There Goes The Stock Market

S&P 500 at fresh lows, down more than 20 points to 1180. The dollar is at fresh extremes against EUR, JPY, GDP, CAD and AUD.

EUR/USD Flashing Negative

We would have to close above 1.3725 to mitigate the downtrend.

USD/CAD at Highest Since Jan

A double whammy for CAD. No QE3 and outlook lowered. A close at these levels is bullish.

Takeaways From The Fed

• Fed now sees “significant downside risks to the economic outlook”
• Versus “downside risks to the economic outlook have increased,” in prior statement
• Active Operation Twist but not extremely aggressive
• No specific mentions of other policy tools
• No change to IOER, this is boosting USD/JPY
• Fisher, Kocherlakota and Plosser dissent “did not support additional policy accommodation.”

Very close to expectations but no cut in IOER

No much to get excited about here. The market expected a twist of roughly this amount. They did not launch QE3 and they did not cut the interest rate on excess reserves.

The dollar is rallying as the Fed did not go the whole-hog on adding additional liquidity to the financial system.

The long-end of the US yield is soaring as the Fed says it will sell securities maturing in three years and buying maturities from 6 years out to 30 years.

There were three dissenters once again, helping keep Bernanke and the other doves on the FOMC from ramping up the printing presses. That’s a structural plus for the dollar.

That said, the Fed remains extremely downbeat on the economic outlook and they are clearly trying to target unemployment, which is a tough thing to influence via monetary policy.

EUR/USD Gives Back Gains

The trade has been to buy the dollar and sell stocks so far but it’s still early. EUR/USD fell below 1.37 but has bounced back to 1.3725.

The big surprise here is that the Fed is buying 30-years. Bond yields down 15 basis points to 3.08%.

$400B of Operation Twist

This is the active version of Operation Twist. Investments will be 6-30 years, which is wider than the 7-10 years expected. Maturities of 3-years and less will be sold.

Dollar gaining on the lack of QE3. USD/CAD rises above parity.

No QE3 Announced

No additional details about range of policy tools available.

No Change in Fed Funds Rate

The key rate held at 0-0.25%. Outlooks remains “likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.”

FOMC decision is here

Fed Implements Operation Twist

More to come…