- S&P 500 closes well above 1150 old highs, up 9 points to 1159, highest since Oct ’08
- Fed leaves policy unchanged; retains “extended period” language, upgrades economic outlook slightly; mortgage bond purchases to end on schedule at end of March
- S&P affirms Greece’s BBB+ rating, removes from credit watch, outlook still negative
- EU’s Rehn: Will review Greek situation in mid-May
- US Treasury: Unemployment to stay high for an extended period
- US Senate China currency bill takes shape, gains Republican backing
- US Treasury: China should move to more market-oriented forex regime
- BOE’s Bean: UK deficit unsustainable over medium-term, a factor behind GBP weakness
- US yields drop after Fed: 2-year note 0.91%, down 4 bp, 10-yr 3.65%, -5 bp
EUR/USD was boosted headed into New York trade by better than expected ZEW data and never looked back. It consolidated gains below 1.3730 before edging firmer at the 15:00 GMT fixing and finally racing higher (to 1.3771) after S&P affirmed Greece’s credit rating and removed it from watch for a downgrade.
We traded in choppy fashion in the run-up to the FOMC statement and slipping as low as 1.3716 just before the release and then soon racing to 1.3779 within moments. another dip, this time to 1.3730 was followed by a sprint to 1.3784 where we stalled ahead of rumored 1.3800 barriers. Technically, we closed above the downtrend in place since since December for the first time today.
Cable took off after the Fed, building on early gains on the heels of the Conservatives putting some distance between themselves and the ruling Labour party. Bearish comments on the pound from BOE member Bean did not prompt any selling from near session highs, a signal to GBP shorts to cover quick. Prices rocketed as high as 1.5259. Traders were badly burned on the day, having sold earlier after waves of M&A selling took the pound below 1.5000 in London early in the day.
USD/JPY eased slightly with US yields after the Fed but dips were limited on buying of JPY crosses like GBP/JPY and AUD/JPY as the era of cheap money was perpetuated by the Fed again today. Dips were limited to the 90.16 level in New York trade.
AUD/USD rallied to 0.9193 as risk trades performed strongly in New York afternoon trade. Whispers of options protection ahead of 0.9200 helped slow the advance. USD/CAD fell to its lowest levels since the summer of 2008 at 1.0137 today after triggering a 1.0150 barrier.
