More thoughts about FOMC: new forecasts and “dot plot”

•     More thoughts about FOMC:  new forecasts and “dot plot”

–    The FOMC meeting will also include the quarterly update to the FOMC’s economic forecasts, including the famous “dot plot” of Fed funds rate forecasts

–    Members are likely to lower their 2015 inflation forecasts and therefore their Fed funds estimates too. But they still expect rates to rise much faster than the market does

–    Assuming they remove “patient,” I look for Yellen to clarify the decision and explain what FOMC will be looking for in deciding when to start raising rates

•     DXY longs, AUD shorts hit record on COT report

–    Speculators in US futures now record long DXY, record short AUD, short all currencies except RUB. Stretched positioning could signal a (temporary) turnaround

•     BoJ admits temporary defeat

–    BoJ admits CPI inflation expected to be “around 0% for the time being”

–    But sticks with current policy; still only 1 dissenter

–    Either BoJ will have to up stimulus later in the year or govt will push for weaker JPY

•     RBA minutes show members believe rates might be cut later

–    Market wasn’t wrong, just early – I remain bearish on AUD

•     Today:

–    Eurozone: German ZEW survey; both indices expected to rise; could support EUR

–    US: Housing starts for Feb expected to slow, while building permits expected to rise, consistent with improving housing market.