* The greenback declined on the FOMC statement but later rose against most major currencies after US equities reversed gains and had a selloff in late NY trading. The Federal Reserve, as expected, maintained the target range for the federal funds rate at 0 to 0.25% and upgraded its economic assessment for the US economy. The Fed sees economic activity as having “picked up” in today’s FOMC statement versus just “leveling out” in the previous statement. The Fed also sees a slow economic recovery with contained inflation and expects to keep rates at “exceptionally low levels” for “an extended period.” The dollar index rose to 76.36 after trading below the 76 handle. The S&P 500 declined 10.79 points to 1,060.87. The euro, yen, Swiss franc, aussie, and loonie reversed earlier gains as stocks and risk appetite declined.
* The GBP/USD rose on today’s release of the Bank of England September 9-10 minutes, but reversed earlier gains as US stocks fell in late trading. At the September meeting, the BOE Monetary Policy Committee voted unanimously to keep its quantitative easing program at £175 billion and hold interest rates at a record-low 0.50%. The minutes calmed fears over a possible expansion of the BOE’s quantitative easing program. Meanwhile, the Confederation of British Industry sees an end to the UK recession and forecasts 0.3% and 0.4% growth for the final two quarters of 2009. However, the prospects for growth next year will be “feeble” as the economy continues to feel the effects of the financial crisis and tight credit. The GBP/USD has been trading in a sideways pattern since June. The pair broke its uptrend in August and now looks heavy. Therefore, we are selling the GBP/USD with stop at 1.6760. There are supports in the 1.61 and 1.59 areas and resistances in the 1.66 and 1.67.
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