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Fed Keeps $85B Bond Buying Pace And Sees Disinflation Risk

Fed Keeps $85Billion Bond Buying pace, sees disinflation risk.

Asian shares: Japan's Nikkei 2.47%, Hong Kong's Hang Seng 1.77%(07:00 GMT), Korea's Kospi 0.35%, Australia's ASX 200 0.08% and China's Shanghai 0.76%.

As Fed maintained Rhetoric unchanged, US$ took a hit. The Federal Open Market Committee reaffirmed previous statements today at the 2PM release. Speculation earlier in the week hinted at a possible reduction in the unemployment threshold for an interest rate hike, but the Fed made it clear that the federal funds rate will remain at 0 to 0.25 percent at least as long as the unemployment rate remains above 6.5 percent.

AUD/USD hits September 2010 low at 89.27. Real bad data for the 'Aussie'…. AUSTRALIA AIG PERFORMANCE OF MANUFACTURING INDEX 42 VS 49.6 PRIOR, and the 'bears reall didn't need any more reason to pummel the Aussie dollar'. The manufacturing data is their icing on the cake. On the other hand, AUD/NZD is trading at levels not seen since the fall of 2008: 1.1248. Moreover, AUD/NZD has decreased -4.32% since highs made in July.

Swaps show rate forecast for the RBNZ highest since August 2011.

The Federal Reserve said it will maintain its $85 billion in monthly bond purchases and persistently low inflation could hamper the expansion. "The committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term," the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington.

ADP employment report showed an increase of 200k jobs from 180k expected, followed by the GDP q/q (1.7% from 1.1% exp). Usd/jpy rose to 98.50 from 97.60 before the data while the dollar continued rising against sterling and the Australian dollar. The euro showed remarkable resilience and regained most of its losses against the dollar. The common currency fell to 1.3215 from 1.3300 but recovered most of the losses as after the FOMC statement later yesterday touched 1.3350

Euro zone unemployment falls for first time in two years. The number of people unemployed in the euro zone fell for the first time in more than two years in June, the latest sign that the bloc's economy may be pulling out of recession, while inflation held steady in July, fuelled by spending on food. Compared with May, 24,000 fewer Europeans in the single currency area were jobless in June, the EU's statistics agency Eurostat said on Wednesday, the first decrease since April 2011.

Watch movers for today: CNY Manufacturing PMI, BOE rate decision, ECB rate decision, USD ISM Manufacturing.

By Zulutrade