Reactions to the FOMC statement overnight were relatively muted. Fed sounded upbeat on the economy but left little clue on whether it will raise interest rate in September. The statement noted that the US economy has expanded "moderately". The job market continued to "improve, with solid job gains and declining unemployment. Also, "underutilization of labor resources has diminished". Meanwhile, risks for the outlook were "nearly balanced". FOMC members voted unanimously to keep policies unchanged. After the release, markets are still expecting a 50/50 chance of rate hike in September. Some analysts noted that markets should have priced in the first hike between September and December. And, what matters now is the timing of the second rate hike and subsequent pace of tightening. And that will remain heavily data dependent. Focus will turn to Q2 GDP from US to be released later today.
Stocks extended a recovery after FOMC statement. DJIA managed to drew strong support from 55 weeks EMA (now at 17518.80) and 38.2% retracement of 15855.12 to 18351.36 this week. 17399.17 should be a short term bottom and strong rise would be seen back to 55 days EMA (now at 17881.16). The strong rebound from 55 weeks EMA saved the medium term bullish trend. Also, price actions fro 18351.36 are so far still corrective looking. Even though bearish divergence condition seen in both daily and weekly MACD. There is not enough evidence for medium term trend reversal yet.
Elsewhere, New Zealand building permits dropped -4.1% mom in June. Australia import price index rose 1.4% qoq in Q2, below expectation of 1.5% qoq. Building approvals dropped sharply by -78.2% mom in June versus expectation of -1.0% mom. Japan industrial production rose 0.8% mom in June versus expectation of 0.3% mom. Swiss KOF, German unemployment and CPI, Eurozone confidence indicators will be released in European session. The main focus today is US Q2 GDP which is expected to grow 2.6% annualized. US will also released jobless claims as usual on Thursdays.