Risk sentiment is this week's focus following the US/British/French attack on Syria, with the USDJPY's tentative breakout beginning to falter as prices head into the Ichimoku Cloud.
Squawk / 15 June 2016 at 18:06 GMT
Head of FX Strategy / Saxo Bank
Initial market reaction is USD bearish as focus perhaps on one FOMC dissenter joining the decision to not hike rates. Nothing terribly dovish to the alterations in the statement itself as seen attached using Microsoft word comparison. But the dot plots shows six Fed officials expecting one rate hike this year versus only one in March. Will be back shortly with more thoughts.
John J Hardy John J Hardy
Headline assessment of forecasts looks indifferent on balance - growth and Fed Funds rate marginally lowered, while inflation raised - hardly anything changed for 2018 except fed funds rate projection (seen as a capitulation and the key driver of the initial reaction). All clearly pointing to total data dependence and we'd be best off admitting these forecasts are all more or less worthless beyond the near term reaction function. Yellen's tone at the presser the next key.

On the economic forecasts, we have GDP projection lowered -0.2% for 2016 and -0.1% for 2017, while unemployment rate forecast same except for 2018, where it was raised to 4.6% from 4.5% (come on, really?). Interestingly, the PCE inflation forecasts were raised for both headline and core for 2016 and for the core (to 1.9% from 1.8%) for 2017, while unchanged at 2.0% for 2018.

The Fed Funds rate projections lowered to 1.6% for next year from 1.9% in March and 2.4% in 2018 from 3.0% in March.
John J Hardy John J Hardy
Later comment in Q&A: seems to say that a sufficiently impressive labor market report in coming month enough for FOMC to pull trigger and that every meeting is live has the USD clawing back some of its losses. Still overall message is total data dependency - happy to hike, but have to see the data to do so.


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