While the Federal Reserve kept its “considerable time” phrase within yesterday’s statement, that was pretty much the only dovish part of it, as the US central bank called time on its asset purchase program, as had been widely expected. The FOMC then proceeded to keep investors slightly off balance by painting a much more optimistic view of the US economy that could possibly have been suggested only a couple of weeks ago, in the wake of those surprisingly dovish comments by James Bullard, about the possibility of extending QE, in the wake of concerns about Europe and a Chinese slowdown. Given the nature of those comments the Fed statement was as far away as it could have been from what the market had been expecting. The two most hawkish members Richard Fisher and Charles Plosser dropped their dissent in the wake of the end of the bond buying program, while Minneapolis Fed President Kockerlakota dissented on the basis that the decision wasn’t dovish enough, and that QE should have continued. The committee also played down the risk of below target inflation while also stating that the amount of spare capacity appeared to be gradually diminishing, suggesting that if the data continued to improve then we could well see a rate hike sooner than expected. As always the Fed insisted that any move on rates would be data dependent, but given some of the recent chatter from various FOMC voting and non-voting members alike the tone of the statement was all the more surprising for its hawkish tone, particularly given that there was no mention of the problems in Europe, the slowdown in China or concerns about a strong US dollar keeping inflation low. We should see how well founded this confidence in the US economy is later today with the release of the first iteration of US Q3 GDP which is expected to show a decline from the strong bounce back of 4.6% seen in Q2, to a more subdued 3%. Weekly jobless claims, after hitting a fourteen year low earlier this month, are also expected to rise ever so slightly to 285k from 283k. Soon after the release of these numbers Fed Chair Janet Yellen is due to give a speech in Washington on diversity in the economic profession. Before that we have the latest October unemployment data from Germany where some of the more recent economic data has suggested that the economy could well be flat lining. In September we saw unemployment rise by 12k and this is expected to come down to a rise of 4k with the unemployment rate staying at 6.7%, one of the lowest in the euro area. More importantly from an inflation perspective the latest German CPI numbers for October are expected to show a rise of 0.9%, up from 0.8% and making it much less likely that the Germans will feel inclined to acquiesce to demands for the ECB to embark on any form of full blown QE program. In Spain the latest GDP numbers are expected to see a rise of 0.5%, down from the previous 0.6%. Somewhat surprisingly in the wake of last night’s volatility in US markets, European markets are expected to open fairly flat this morning as markets for now, take the new reality of no new stimulus in their stride. EURUSD – a sharp slide lower yesterday from 1.2770 has seen us push below the 1.2600 level. We need to see a move below 1.2570 to argue for a move towards 1.2400. A move beyond 1.2800 argues for a move towards 1.2900 and the highs this month. GBPUSD – the failure to follow through on this week’s move above 1.6150 has seen the pound slide back, and push below the 1.5995 area which was last week’s low. A break through here could well target a move to the 1.5875 lows of this year. EURGBP – we continue to find support between 0.7855/65 but while we stay below the 0.7940 area then the risk remains for a move back towards the September lows at 0.7760. USDJPY – yesterday’s break above the 108.50 level suggests the possibility of a retest of the 110.00 area. The break last week above 107.50/60 should now act as some support, a break of which would suggest a test back towards 106.20. CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.