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Another Fed "Policy Error"? Dollar And Yields Tumble, Stocks Slide, Gold Jumps

Yesterday when summarizing the Fed's action we said that in its latest dovish announcement which has sent the USD to a five month low, the Fed clearly sided with China which desperately want a stronger dollar to which it is pegged (reflected promptly in the Yuan's stronger fixing overnight) at the expense of Europe and Japan, both of which want the USD weaker.

All Eyes On Yellen: Futures Flat Ahead Of Fed Meeting Expected To Usher In More Rate Hikes

Today Janet Yellen and the FOMC will go back to square one and try to reset global expectations unleashed by the ill-fated December rate "policy mistake" hike, when at 2pm the Fed will announce assessment of the economy (even if not rate hike is expected today) followed by Yellen press conference half an hour later.

Central Bank Rally Fizzles: Equity Futures Lower As Attention Turns To "Hawkish Fed" Risk

Central Bank Rally Fizzles: Equity Futures Lower As Attention Turns To "Hawkish Fed" Risk

The biggest macro development over the weekend was China's latest "gloomy" economic update, in which industrial production, retail sales and lending figures all missed estimates, however now that we are back to central bank bailout mode, bad news is once again good news, and the Shanghai Comp soared +1.7% among the best performers in Asia on calls for further central bank stimulus while the new CSRC chief also vowed to intervene in stock markets if necessary. In other words, the worse the data in China, the better.

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