CHF

Markets shrink their earlier losses as the Federal Reserve issues an almost identical FOMC statement to the January meetings, maintaining its view that measures of underlying inflation have been subdued despite recent increases in the prices of energy and other commodities are currently putting upward pressure on inflation. USD backing down from risk aversion buying, while EURUSD stands at the top of the days ranges as warned last night following the FOMC decision.

The ECB is still expected by many to raise rates as early as April, hence, enabling EURUSD to hold above the Jan 12 trendline support (see last nights IMT). Accordingly, EURUSD remains among the pairs most likely to rebound the hardest (against USD). CHF dragged USD during the escalated selling in equities, bringing back the francs safehaven status. This could be considered as an ideal for partial USD hedge to shorts in AUDUSD, NZDUSD and longs in USDCAD. managed to rally against USD during the worst point of the the day in equities The 1% sell-off in Wall St maybe well received by the bulls considering the indices rebounded from 2.5% decline earlier in the day, but the fear of further nuclear and economic breakdown in Japan and Asia has not gone away. Look out for UK jobs figures and BoEs governor King speech tomorrow.

LATEST CHART ON VIXhttp://chart.ly/ yb9s786

Ashraf