The NY session started off with a thud but ended with some major fireworks on the back of the highly anticipated FOMC press statement. The Fed left rates unchanged at the 0.00%-0.25% range as expected but their assessment of the economy was decidedly upgraded. The committee characterized economic activity as having ''picked up'' while their last communique noted a mere ''leveling out'' in growth. Risk trades went gangbusters on the headlines and this coupled with the affirmation that rates will remain ''exceptionally low'' for an extended period initially weighed on the US dollar as it once again became the proverbial whipping boy. Equities rallied to session highs while EUR/USD touched 1.4845 on the follow.

The rally would prove short-lived however, and the bond market was the only one to get it right. The Fed actually looks more cautious about the recovery given that they have extended the time horizon for their $1.25 trillion agency MBS purchases. This left the rally in risk looking more knee-jerk than anything, while the bond market read between the lines and took yields lower right off the bat (a risk negative move). Everything else caught up to the Treasury market eventually as equities plunged more than -1.8% from intraday highs †and closed well in negative terrain †while EUR/USD scurried back down more than one big figure to the 1.4740/30 zone. The Tenkan line in EUR/USD now sits at 1.4680 and should be closely watched overnight.

The commodity space saw some nice price action in NY as well. Crude oil inventories crushed BCO/USD as the DOE's report showed a build of +5.4 million barrels for the latest week, on the heels of a -4.7 million draw prior. The market forecast was for a draw of -1.4 million, so the surprise was palpable. This is the first time the daily average supply is significantly outpacing demand in five weeks †with roughly a +400,000 barrel imbalance. BCO/USD broke below daily trendline support at $68/bbl and the next big level lurks at $66/bbl now †the July and September lows. Given the flip back to an oversupplied market, we think the move will be sustained in the medium term. Look for the resource-based currencies (AUD, CAD) to remain under pressure on the back of weaker oil as well. The precious metals tracked the price action in the buck as XAU/USD printed a $1018 high while XAG/USD traded just above $17 †both are well off those levels now that the greenback has come back better bid.

Upcoming Economic Data Releases (Asia Session) prior expected

9/23 23:50  JN  Merchnds Trade Balance Total  AUG  Â¥380.2B  Â¥157.0B 

9/23 23:50  JN  Adjusted Merchnds Trade Bal.  AUG  Â¥194.5B  Â¥187.7B 

9/23 23:50  JN  Merchnds Trade Exports YoY  AUG  -36.5  -36.5 

9/23 23:50  JN  Merchnds Trade Imports YoY  AUG  -40.8  -41.6 

9/24 1:00  AU  HIA New Home Sales (MoM)  AUG  0.10%  - - 

24-3 SEP  JN  Small Business Confidence  SEP  41.8  - - 

9/24 1:30  AU  Reserve Bank Releases Financial Stability Review   

9/24 4:30  JN  All Industry Activity Index (MoM)  JUL  0.10%  0.80%