NO SURPRISES HERE - On balance, no real surprise from the Fed. Though the market has been positioning more aggressively for a policy reversal in recent weeks, this shift is to be taken as a longer term shift that is just getting underway and should continue. However, on a shorter-term basis, the Fed didn't do much to change its path, and wasn't going to surprise the market with anything remotely hawkish. When you really break it down, the combination of a disappointing NFP at the beginning of the month, Wednesday's softer than expected inflation data, and a Fed that sees no evidence of asset bubbles, were all clear signs that there was no reason to expect the Fed to move more towards the hawkish side.
THIS TIME IS DIFFERENT - But the Fed is slowly moving towards higher rates and this is why we should expect more rotation into the US Dollar over the medium and longer-term. The Fed continues to monitor the economy closely and should we see an impressive NFP next time around, a tick back up in inflation and solid overall data, it should translate into a more hawkish tone as soon as the next meeting. The days are gone where we would see solid data in between meetings and the Fed would still not react. Even if you listened to Yellen get into the "considerable time" language, it was awkwardly clear that "considerable" really isn't a time thing and could be removed from the statement at any moment. I thought this was interesting and am looking forward to reading more into this.
NEW TRADE IN PLAY - On the strategy side, I had said that I would be looking to sell USD/JPY for a short-term play, and I talked about selling between 107.50 to 108.00. But with all that was going on Wednesday, I was a little more patient and sold at 108.20. While the longer-term outlook is highly constructive, on a short-term basis, it is too hard to ignore such a compelling set-up. Technical studies are through the roof, and I would expect to see some form of a minor retracement in the sessions ahead to allow for a healthy correction. This is a risky play, but one that could prove rewarding, particularly if risk assets come under pressure. The Yen is no safe haven currency, but at the same time, can benefit when market participants are exiting higher yielding currency plays. So let's see how it plays out. Now onto the SNB rate decision and Scotland referendum (covered both in recent reports linked here).