Market wrap: slightly hawkish statement by the Fed - Westpac

Analysts at Westpac offered a market wrap, highlighting today's Fed interest rate decision.

Key Quotes:

"Global market sentiment: Risk appetite remained firm in the wake of the FOMC announcement (S&P500 +1%, oil +3%). The Fed remained on hold, issued a slightly hawkish statement, and downgraded its rate projections, all of which has left bond yields and the USD slightly lower.

Interest rates: US 10yr treasury yields initially spiked to 1.74% following the BoJ, but later retraced, then falling from 1.70% to 1.65% in response to the FOMC. Market pricing of the chances of a Fed funds rate hike in December firmed slightly to around 75%.

Currencies:  The US dollar index is around 0.5% lower, having risen following the BoJ and fallen following the FOMC. EUR is higher at 1.1197, compared to 1.1150 pre-BoJ. USD/JPY initially rose from 102.00 to 102.79 post-BoJ, but slumped to 100.54 upon deeper reflection (we read the BoJ outcome as a hawkish disappointment), and slipped further to 100.36 post-FOMC. AUD benefitted from the US dollar’s weakness, rising from 0.7560 to 0.7630. NZD is also higher at 0.7366. AUD/NZD rose from 1.0340 to 1.0375."