Risk on as the FED stalls on inflation

XAUUSD, H1                      

Last night’s FOMC statement offered no surprises and no there was no change to interest rates.

There was no firm date on the balance sheet unwind. However, the policy statement did indicate the run-off will begin “relatively soon,” versus this year in the June statement, which is basically what Chair Yellen said  at her latest testimony. The decision was unanimous too with no dissenters. There was also one important change versus the June statement; the elimination of word “recently,” referring to the decline in inflation, suggesting there’s some concern the weakening will be more long lasting rather than the assumption it was only  temporary. The statement referred to jobs growth as “solid”.

This was a RISK ON trigger for Bonds, Stocks and Commodities.  USD fell again and exceptions of a December rate hike dropped  as low as 40%, they were 50/50 before the statement. The USDIndex dipped below 93.00 (a two year low) and EURUSD broke 1.1750 (two year high).

Gold triggered a long position on the breach of 1250 (t1 1265, t2 1275 and sl $1236). The AUDCHF short position was stopped out for -82 pip loss. Following yesterday’s successful 47 pip short on the GBPAUD H4, the Daily reversal and did not trigger. USOil holds $48.60 after profit takers moved in at $48.70 following a strong week and the big inventory draw-down yesterday.