No surprises from FOMC

FOMC keeps its fund targets the same, so there wasn’t much surprises in the FOMC statements as well. US retail sales came in better than expected as well at 0.8% vs 0.6%.

Dollar strengthened after the retail sales and the lack of concern at the FOMC over the rebound in US yields to accelerate its bonds purchases.

An early London morning sell off in the USDJPY was followed by a sharp reversal after huge strides in the US 10 year yield.

EURUSD touches 1.3500 for the first time in 3 weeks during Europe session before giving back its gains. EURUSD was undermined by news that Belgium outlook is revised to negative from stable by S&P. S&P says prolonged political uncertainty may hurt Belgium rating, Bloomberg reports. Meanwhile, Italy's Berlusconi wins no-confidence vote; government survives. PM won the confidence vote in the lower house by a majority of just 1; which means 314 MPs voted against it. So the government, while still in power, is held up by 1 MP.  Ahead, Ireland votes on whether to accept the EU/IMF package.

UK CPI numbers were higher than consensus at 3.3% y/y while the RPI numbers also beat expectations at 4.5%. Our UK economist notes that the main drivers were food and clothing, which posted the highest inflation rate since 1997. Sterling failed to react positively to the news, as although it reduces the prospect of further QE and gives the hawks more weight, the fears over stagflation also linger.

We have another fun-filled day of Data today, so we just may see some more volatility today.

Data Today:

UK Claimant count rate - 9.30am GMT

UK jobless claims change - 9.30am GMT

UK average weekly earnings - 9.30am GMT

UK ILO Unemployment rate - 9.30am GMT

US CPI - 1.30pm GMT

US Empire Manufacturing - 1.30pm GMT

US Totel Net TIC Flows - 2pm GMT

US Net Long term TIC Flows - 2pm GMT

US Industrial production - 2.30pm GMT

US Capacity Utilization - 2.30pm GMT