Forex Strategy Video: Dollar Rallies, S&P 500 Stubborn after FOMC Talking Points:
• FOMC Chair Yellen announced a $10 billion Taper, updated forecasts and a change in forward guidance
• For dollar traders, the most remarkable change was the upgraded rate forecasts moving forward
• The downshift in stimulus has yet to tether risk trends back to gravity - but it will happen eventually
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The FOMC rate decision proved a market-moving event - though its impact was decidedly different between the US dollar and general risk trends. For the greenback, the 'sufficient underlying strength' assessment for the economy and escalated rate forecasts over the next two years offers a distinct advantage in the carry trade race. That being said, a withdrawal of stimulus support isn't a definitive trigger to prompt a deleveraging of risk trends. In today's Strategy Video, we focus on the Fed's policy decision along with its short and medium-term implications for the dollar and speculative appetites.
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