Archived IMT (2011.01.27)

S&P CUTS JAPANs sovereign debt rating to AA- from AA while keeping a stable outlook Yen has been hit across the board, but it is the USD that is broadening its gains, dragging the high yielders lower. AUDUSD DROPS more than a full cent, now at 0.9888, while GBPUSD off by over a half a cent to 1.5888. Although none of the FOMC members dissented at the decision to maintain QE2, there is escalating speculation that Philadelphia Feds Plosser and/or Dallas Feds Fisher will demand the end of QE2 as early as the March FOMC meeting. The fact that the FOMC mentioned rising commodities in yesterdays statement suggests the central bank may be scrutinizing any bottoming of disinflation. This means that each and every speech by voting Fed members will be closely watched for any new attention towards inflation, in which case will boost US yields and possibly support USD. One reason why US yields rallied after yesterdays FOMC decision (despite full consensus) was the mentioning of rising commodity prices. You can find details on GBPUSD H&S in part 7:15 mins. of my video http://bit.ly/cwG0W5 as well as SILVER TECHS. Aussie H&S remains intact w/ 1.0030 unable to be broken and 0.9860 as prelim support, folowed by 0.9820.