U.S. Dollar Lower Following FOMC Announcement

The U.S. dollar had a choppy session but traded slightly lower as the
World Economic Forum got underway in Davos and as the FOMC ended a
two-day meeting - the first FOMC meeting of 2011. The Fed maintained
its 0-25bps rate target as expected and held steady with its asset
purchase program. The statement from the Fed was largely similar to
that of the December 14 meeting, with a slight change in rhetoric in
labor, household and business spending maintaining the view that the
pace of the recovery is insufficient. The FOMC was unanimous for the
first time since December 2009 - a sign that the committee is broadly
in agreement for now. The Reserve Bank of New Zealand (RBNZ) also
announced interest rates and held steady at 3.00% as anticipated. The
bank stated that it will keep the cash rate low until the recovery
becomes 'more robust' and inflation pressure more obvious. The overall
statement was slightly upbeat noting that confidence has picked up ant
forward indicators of activity have 'firmed somewhat'. Kiwi (NZD/USD)
rallied following the announcement to trade as high as 0.7720/25.

In other economic news, U.S. housing data was a positive surprise with
December new home sales rising by 17.5% MoM to 329K from the prior
month's 280K (revised lower from 290K) while the market was
anticipating only a slight rise to 300K.

U.S. equities climbed higher although the Dow was unable to close
above the key 12,000 level despite trading above the level earlier in
the day. The Dow Jones Industrial Average rose by about +0.07% and the
S&P 500 advanced roughly +0.42%. Commodities were trading positively
with gold, silver, and oil gaining by about +0.69%, +2.06%, and +1.49%
respectively. U.S. 10-year Treasury yields rose nearly 10 bps to
around 3.42%.

On the data front for the upcoming Asia/Pacific session are
Australia's Westpac Leading index for November, Japan's December trade
balance figures and weekly securities investments abroad data.
Source: ActionForex.Com