Brief analysis of the markets post FOMC......

"The dollar continued to be sold in Asian and early European trade in post FOMC reaction as markets become more and more convinced that the Fed has no intention of hiking rates in september despite issuing a generally upbeat communique yesterday.

The FOMC statement yesterday noted that "On balance, payrolls and other labor market indicators point to some increase in labor utilization in recent months" and "household spending has been growing strongly." However the FED tempered expectations by cautioning that "Market based measured of inflation compensation remain low; most survey based measures of longer term inflation expectations are little changed, on balance, in recent months."

The later sentence provided US monetary officials with plenty of wiggle room to hold rates steady until December at very earliest. And in all fairness to FOMC policymakers there was very little chance that US officials would make any interest rate changes ahead of the US election in November.

Although the FED maintains its apolitical status, the wildly polarizing tone of this years election has no doubt made most FED officials highly fearful of causing further turbulence in what already could prove to be a very volatile environment for the capital markets.

Therefore after a knee jerk reaction higher, the buck started to slip against all majors in late North American trade yesterday and has continued to drift lower as EUR/USD popped back above 1.1100 figure and USD/JPY dropped below 105.00"

Looks like BOJ monetary policy statement and conference tomorrow morning will be the key driver of the markets in the coming sessions.

The FED has moved from 4 rate hikes this year to markets now pricing 1 (as stated in the article above it will also be highly unlikely due to November elections). Looks like the dollar swings will be with us until December which in my 2 cents looks like a high probability.

USDJPY approaching 100....Caution ahead as BOJ could decide to intervene.

With the negative interest rates doing little to help in bringing inflation up, what would be the effect of positive interest rates? Wouldn't they help in catching the markets unawares and making the Yen cheap therefore reducing Abe's headache?

NB: I acknowledge that positive rates are only applicable in markets with high inflation, but the negative rates are not helping Japan at all, in any case they seem to be doing more damage. My 2 cents.

I love being contrarian and i predict BOE holding the rate as it is. A cheap pound is better for them.

C&P from BBC Business news:
>>>>>>>>

UK interest rates have been cut from 0.5% to 0.25% - a record low and the first cut since 2009.

The Bank of England announced a range of measures to stimulate the UK economy including buying £60bn of UK government bonds and £10bn of corporate bonds.

The Bank also announced the biggest cut to its growth forecasts since it started making them in 1983.

It has reduced its growth prediction for 2017 from the 2.3% it was expecting in May to 0.8%.

The decision to cut interest rates to 0.25% was approved unanimously by the nine members of the Monetary Policy Committee (MPC) and is the first change in interest rates since March 2009.