- Fed announces $1.1 trln in fresh quantitative ease; to add to MBS purchases by $850 bln and buy Fed $300 bln long-term Treasuries over the next six months; economic outlook very weak
- US CPI rises 0.4% in February, core up 0.2%
- US current account deficit narrows 7.9%
- UK FSA reveals proposal for firmer regulatory regime
- Obama says needs resolution authority to wind down non-banks like AIG
- MPC member Blanchflower: UK unemployment will reach 3 mln in 2010
- US equities rise 2.0% after Fed, up 19% from low. Gold reverses slide to $885 intraday, soars to $945 after Fed ramps up QE
- US yields fall sharply after Fed, 10-year yield down about 45 bp to 2.52%
EUR/US had done a good deal of work to the topside prior to the Fed, reaching 1.3156 before easing to 1.3110 on profit-taking before the statement. In less than 1 minute, EUR/USD reached to 1.3325 level after the printing presses were switched onto overdrive. 1.35 barriers are too close to ignore and will likely be knocked out tonight. Next resistance is the 50% Fibo of the drop from 1.4722 at 1.3586.
USD/JPY was knocked down to 95.70 before stabilizing on EUR/JPY buying. 129.70 resistance was overcome late and 135.00 barriers are now targeted.
Cable rallied along with the euro but it lagged as EUR/GBP rose along with EUR/USD. The cross reached 0.9490 while cable reached 1.4296.
AUD/USD ramped higher as all the commodity currencies rose on fears of inflation (mis-placed, in my view) by the Fed’s action. It reached 0.6801 and USD/CAD fell to 1.2435.
