This FOMC Statement holds in line with my medium run long $ view (hike based) - especially against Yen, GBP, EUR, AUD and NZD who are expected to ease and thus policy diverge.
In terms of market pricing, the Fed Funds Future Option implied probabilities of a rate cut have continued their steepening this week - following the 3wk trend with Sept/Nov now pricing a 25.9/ 26.8% probability of a hike (up from 9% 2wks ago) - Dec now has a probability of 41.8% and is showing some stability here, with a 50bps hike implied at 9.9% and rising steadily. From this the implied probability of one rate hike in 2016 is at nearly 70% (Nov+Dec) - which imo is in line, or slightly below my qualitative probability of 90%. With the probability of 2 hikes at 12.5% which is about what i would expect.
Nonetheless eyes are now focused on BOJ - which is expected to be a year changing meeting.
September FOMC Rate Decision Statement - 0.50% unchanged:
--Fed Leaves Policy Rate Unchanged, Says Near Term Economic Risks Have Diminished
-Fed Offers More Upbeat Assessment of Labor, Economic Conditions
-Fed Could Raise Rates Later This Year, Possibly As Early As September
-Federal Reserve Keeps Fed Funds Range Unchanged at 0.25% to 0.50%
-FOMC: Voted 9-1 For Fed Funds Rate Action
-Fed Leaves Discount Rate Unchanged at 1.00%
-Fed: Economic Activity Expanding At A 'Moderate' Rate
-Fed: Labor Market Strengthened, Job Gains 'Strong' in June
-Fed: Payrolls, Other Indicators Point to 'Some Increase' in Labor Utilization in Recent Months
-Fed: Market-Based Compensation Measures 'Remain Low'
-Fed: Survey-Based Expectations Measures 'Little Changed'
-Fed: Expected to Remain Low in Near Term
-Fed: Expected to Rise to 2% Over Medium Term As Transitory Effects Fade
-Fed: Household Spending Has Been 'Growing Strongly'
-Fed: Business Fixed Investment Has Been 'Soft'
-Fed Continues to Expect 'Only Gradual Increases' In Fed Funds Rate
-Kansas City Fed's George Dissents On Fed Policy Action
-George Preferred to Raise Rates to Range Between 0.50% and 0.75%
IMO BOJ friday is the major fundamental "Pivot" for risk - if BOJ deilvers risk will probably carry on rallying until mid-late august. If not, then i see risk assets down on the day and the 2016 risk-off trend resuming.