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A tentative Fed

Last night’s FOMC turned out to be rather a non-event in the end although going into the meeting a degree of bearishness was expected and this didn’t materialise. The word “patience”, which has now become the new “extended period”, remained and despite inflation continuing to plunge on the back of lower oil prices, the Fed’s comments were interpreted as being slightly more hawkish than expected. The dollar crept a little higher after the announcement, but only tentatively and that tentativeness continued overnight, with a broader sell off in the Aussie and Kiwi. These two currencies, with their higher interest rates, look more susceptible to suffering from further dollar strength and it’s little wonder both AUDUSD and NZDUSD headed lower following a shift in stance from the RBNZ at their latest rate decision yesterday evening. This much more dovish tone sent NZDUSD to a new four year low at one point getting below 0.7300.

Today attention will be given to Eurozone consumer and business confidence data and German unemployment and inflation figures. In recent weeks a few glimmers of light had materialised on the economic data front from the Eurozone, so it will be interesting to see what lower oil prices have done for sentiment which is expected to tick higher. Worth noting that the Yen could see some activity overnight as Japanese inflation and unemployment data is released.

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