The impact of yesterday's Fed meeting continues to work its way through world markets. Hawkish leanings among FOMC members sparked a US Dollar rally that has continued into today.

As expected, the FOMC has decided to launch its balance sheet normalization program in October under the plan announced back in June. This has the potential to drain away some of the easy money that has provided rocket fuel to stock markets in recent years but at the same time reflects a stronger economy that no longer needs emergency support. 

More importantly, the dot plot of Fed Funds projections shows that 11 members still support one more rate hike this year, likely in December, and 9 members are projecting 3-4 rate hikes in 2018. This was clearly a more hawkish stance than the street had been expecting sparking a big US Dollar rally. 

Gold is getting hammered today falling 1.3% and taking out $1,300 to signal the start of a new down leg.  The USD rally is impacting commodity priced with WTI falling 0.5% although it has managed to hold above $50 so far. 

The greenback continues to climb against resource dollars like CAD, AUD and NZD. Its biggest gains have been made against JPY following a Bank of Japan meeting. The bank did nothing as expected but interestingly, while other central banks have been becoming more hawkish,  the BOJ's lone dissenter on the dovish side. 

Today brings a number of middle tier US economic reports. We could see some positioning in UK markets and the Euro ahead of tomorrow's big Brexit speech from UK PM May.


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