We had been looking for a lot of market action following today’s FOMC meeting but today’s moves have been even stronger than my wildest expectations. A big reversal for USD has kicked off a massive short covering squeeze in markets that had been depressed by USD strength over the last several months including gold, crude oil, and currencies. Although the central bank removed the patient language from its statement, indicating that interest rate increases could start as soon as June or any meeting from then on, the FOMC also indicated that rate liftoff depends on further labour market improvement and inflation starting to return toward its 2.0% target. Fed member projections, however, indicated that those conditions may not fall into place as soon as thought. FOMC members cut their GDP, core inflation and fed funds forecasts for this year, which the street has taken as highly dovish considering that it would be harder for them to justify a rate increase in a slowing economy. Fed funds projections for year-end narrowed into the 0.50%-1.25% range growing to 11 members from 9 in December. The hawkish faction calling for higher than 1.25% shrunk to 3 members from 6 in December while the dovish faction calling for less than 0.50% increased by 1 to 3 members. In her press conference, Fed Chair Yellen indicated not being patient does not mean they are getting impatient either. She sees rate hikes as data dependent and may or may not start in June. Based on this it now appears likely that rate liftoff could be pushed off to July or September at least after the June projections are released, and that we may only see two increases to 0.75% rather than 3 increases to 1.00% meaning a less aggressive and less hawkish path looks more likely. The prospects for a more dovish Fed ripped the rug out from under USD, and sparked a massive unwinding of positions that had been tied to a rate liftoff as soon a June. It looks like a lot of people have been caught off side so markets may be volatile for the next several days as traders scramble to reposition. This has taken the pressure off of other currencies, enabling gold, EUR, CAD, AUD and others to rebound in a major way. CHF has been one of the strongest gainer ahead of tomorrow’s SNB meeting. NOK and GBP have lagged behind their peers ahead of tomorrow’s Norges Bank meeting and after today’s UK pre-election goodie filled budget. EURUSD took a big run at $1.1000 on the news. The USD drop has also taken the lid off a number of commodity markets which are prices in USD, particularly crude oil and gasoline which have gained about 6% with WTI driving back toward the $45.00 level. The main event for Asia Pacific markets is the New Zealand GDP report, but AUD, NZD and JPY may all be active particularly relative to USD as traders respond to today’s FOMC news. Corporate News Silver Wheaton $0.14 vs street $0.15, 16% dividend cut Economic News Significant announcements released overnight include: US interest rate 0.25% no change as expected US FOMC statement drops “patient” language as expected US FOMC 2015 GDP forecast cut to 2.3-2.7% from 2.6-3,.0% US FOMC 2015 core PCE infln cut to 1.3-1.4% from 1.5-1.8% US FOMC end 2015 fed funds average forecast cut to 0.625% from 1.125% Sweden interest rate surprise 0.15% cut to (0.25%) SEK 30B QE program US crude oil inventories 9.6 mmbbls vs street 4.4 mmbbls UK jobless claims (31K) vs street (30K) UK unemployment rate 5.7% vs street 5.6% UK average weekly earnings 1.8% vs street 2.2% UK 3M employment change 143K vs street 130K vs previous 103K UK Bank of England minutes 9-0 in favour of maintaining interest rates and QE UK federal budget Upcoming significant announcements include: 10:45 am NZDT NZ Q4 GDP street 3.4% 8:30 am GMT Switzerland interest rate (0.25%) no change expected 8:30 am GMT Switzerland deposit rate (0.75%) no change expected 9:00 am GMT Norway interest rate 0.25% cut to 1.00% expected 9:00 am GMT SNB Jordan press conference 9:30 am GMT Norges Bank press conference 8:30 am EDT US jobless claims street 293K 10:00 am EDT US Philadelphia Fed street 7.0 10:00 am EDT US leading index street 0.2% 10:30 am EDT US natural gas street (51 BCF)