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U.S. dollar rallies as Fed stays on track

Fed remains on track with monetary policy. Balance sheet adjustment will start in October. Most members are expecting another hike this year. Three more hikes are projected for 2018. Neutral rate was downgraded to 2.8% from 3.0%.
Market clearly expected something less hawkish from them. The dollar rallied across the board but the rally run out of steam after 100 - 150 pips of gains. Any further gains may not last because, fundamentally, nothing really changed today.
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U.S. dollar recovers after hawkish FOMC decision

Fed's FOMC was surprisingly hawkish yesterday. They hiked federal funds rate by 25 basis points, as expected, and outlined strategy for reducing their balance sheet. FOMC chair Yellen told reporters that the balance sheet adjustment could begin "relatively soon".
Just a couple of hours before the FOMC decision, both inflation and retail sales reports came in weak and markets sold U.S. dollar on speculation that the FOMC will postpone hiking until data improves. The dollar recovered and followed …
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Nikkei 225 - USD/JPY Correlation

Last year around the summer time I've made this prediction about Nikkei 225, read more here: Nikkei 225 Will Revive Yen Bearish Trend?
Since than there have been many new developments in the market and the macro landscape has been reinforced itself as soon as BOJ has gone full tilt expanding their current QE programme, and BOJ has lunched QQE II on October last year. BOJ decided to increase its amount of monetary base from 60-70T yen to 80T yen, expanding their balance sheet even further.…
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