The FOMC delivered on the highly anticipated volatility, but did surprise at least a portion of the market with commitment to re-invest “principle payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities”. Essentially the Fed is acknowledging the fact that the recovery is losing stream and a double dip recession is of material concern. My personal view that we will not enter a double dip recession because we never really exited the first, but that is beside the point.
The dollar initially took a hit as interest rates on the 10 year Treasury note plummeted to levels not seen since April 2009. Sometime ago I cautioned of being exceedingly bearish rates, as there exists a significant Fib/Wave support zone at around 2.75% on the 10 Yr treasury future. We traded to a 2.745% low before bouncing to close the session at 2.781%, which allowed the dollar to rally from our focus support levels. On the over-reaction to the economic data, our offers were filled in AUDUSD as we trade just around our average entry price. On twitter, I moved stop losses on just 2 of our 4 units to 0.9165 on the outlook that blue wave ii completed at 0.9160 fib zone resistance.
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