FFOMC: The inconvenient fact: Yellen & Dudley still in control. Doves 1: Hawks 0

 

Dear All,

 

A quick note before I am off to Asia. Steen

 

 

FOMC: Keeps "considerable time" but brings out "exit plan paper" - net result: Yellen is more in control of FOMC than market gives her credit for and regional Presidents has less.

 

Market initial reaction is to extend last few weeks trade of stronger US Dollar and higher yield but considering that NET the statement did not move the needle and FOMC remains very cautious I expect these trends to reverse when the "final analysis" comes in.

 

Fed statement tracker - WSJ:    http://projects.wsj.com/fed-statement-tracker/#

 

Fed remains cautioous - WSJ: http://online.wsj.com/articles/fed-rate-hike-view-still-eyes-2015-1410977029

 

Fed keeps "considerbale time" - Beckner - MNI News.... https://mninews.marketnews.com/content/fomc-keeps-considerable-time-revises-ffr-projections

 

I still see this as peak of US dollar strength cycle - the biggest take away for me is that Yellen kept control .

 

She was more dovish in Q & A than statement hence the "counter-balance" is from regional banks Presidents but Yellen, Dudley and Fischer still controls the game plan. 

 

Data dependency remains but even lower unemployment numbers will not move sentiment and needle w. FOMC management - 

 

However today's CPI is of concern. Deflation is coming to the US. This of course is denied by hawkish camp - by the way the same names which said Europe was in no danger less than six month ago -

 

The world is still in process of dealing with credit debt mountains, end of monetary cycle, a China which can't get engine restarted and a Europe where the second biggest economy no longer is in recession but depression. Furthermore Scotland and election is showing a clear trend towards domestic/local focus over international/free trade. In other words: Anti-globalisation is the new trend and the biggest losers over time may be that US of A we all respect and love.

 

TRADE:

 

Buy EURUSD spot here 1.2875 w. firm stop loss @ 1.2810 offered.

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