GBP & JPY are at opposite ends as sterling is the biggest loser in todays FX market flows following an unexpected decline in UK July RICS (House Price balance) to -8 from +9, the 1st negative index since July (and lowest since April 2009). JPY gains on slower than expected Chinese exports growth in Jul, which led to broad-profit taking in Asian and European bourses. I am leaning towards a disappointing market reaction to tonights FOMC decision, whereby only a REFERENCE to asset purchases would be made, instead of an actual IMPLEMENTATION of asset purchases. As Ive explained carefully in the YoutubeVideo (see previous IMT). TOO EARLY FOR QE2: My argument towards expecting the Fed to NOT announce a full implementation of QE today is based on the fact that FINANCIAL MARKET CONDITIONS ARE RELATIVELY STABLE, i.e. US-LIBOR and the VIX are both at 3-month lows and US macroeconomic data looking mixed after the May-June declines, the Fed CAN afford to wait. This will serve as a CONVENIENT EXCUSE for equities to take profit, especially with S&P500 testing its 100-day MA. Id expect YEN strength to overtake USD rebound, with AUD, GBP and CAD among the biggest losers. USDCAD extends gains above 1.0330s, a disappointing reaction to FOMC will be needed to break 1.0380 and onto 1.0430s. GBPUSD to remain defensive ahead of Wednesday BoE inflation report, losses possibly extending towards $1.5570, with resistance capped at $1.5840.