As expected the FOMC decided to leave rates on hold yesterday with no change in policy. However, the dollar found support from the statement that suggested the economy is improving. With dollar-yen spiking a near 200 pips and US yields firmer euro-dollar initially slipped from $1.3410 to $1.3340 on release. The rate failed with recovery attempts, before additional comments that the Fed may taper in 2013 if data forecasts are correct added further weight. The pair flushed stops through $1.3290 to print eventual lows of $1.3262, later closing in NY at $1.3285. Euro-dollar opened in Asia at $1.3300 and slipped in early dealings, holding above $1.3275 as traders reacted to the FOMC rate decision and press conference. Another push on the upside to challenge $1.3300 was met by further supply, euro-yen sales post Tokyo fix added further weight to flirt with FOMC react lows of $1.3262. Rate extended the slow grind through the Asia afternoon tied to a narrow $1.3252-62 range and sits heavy ahead of Europe where eurozone PMI mfg readings will give early direction. Strong demand seen at $1.3250/40 ($1.3250 – 23.6% of $1.2797-1.3390), ahead of more bids at $1.3020/00.
