Trading Video: Is This a Lasting Dollar Plunge and S&P 500 Rally?
• As expected, the Fed dropped 'patient' from its statement and lowered rate forecasts in its projections
• Having played a speculative darling in its leveraged long run, the USDollar retreated after the event
• And, despite the manifest preparation for policy change, the QE-fed S&P 500 rallied
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Technically speaking, the Fed delivered few surprises in its policy event. Yet, that isn't what we would deduce from the dramatic response from the Dollar and equities. From the FOMC event, the 'patient' language was removed to open the possibility of a June hike, GDP and inflation forecasts softened commensurate with global counterparts, and the interest rate forecast was lowered to match the Fed forecasts. Despite the 'in-line' outcome, the Greenback suffered waves of selling fits while the the S&P 500 surged. A leveraged Dollar position can see unwind, but the contrast of a hawkish lean to the likes of the BoE and ECB will find the medium-term bull trend traction once again. Meanwhile, a risk run on a tangible move towards hikes - even if we interpret it as deferred - will struggle to Fed a mature trend. We discuss the fall out from the Fed and review the major event risk dead ahead in today's Trading Video.
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