Market News

• FOMC sees output gap remains quite large;

• Core inflation will decline;

• speaking about the phrase on "extended pperiodd" doesn't know the timing;

• at least two or three FOMC's meetings till ending extended period;

• Incoming statistics point to exit.

• partly slowdown is temporary, partly long-lasting;

• monitoring Greece;

• today Fed is in differnt position versus the QE2 beginning;

• new jobs may not be created by sharp deficit cuts.

The dollar was little changed against the euro after the Federal Reserve said it will maintain monetary stimulus after completing a Treasury-purchase program because economic growth remains sluggish.
The greenback was little changed versus the yen as the Fed maintained its vow to keep interest rates low for an “extended period” after a second round of Treasury purchases failed to improve the economy.

The euro fell earlier versus most major currencies on speculation Greek Prime Minister George Papandreou will struggle to pass austerity measures, even after winning a confidence vote yesterday.
Papandreou will seek approval next week for a 78 billion-euro ($112 billion) package of budget cuts and asset sales to help ensure more financial aid from the European Union and the International Monetary Fund and stave off the threat of default.
The pound fell for the first time in four days against the greenback as minutes of the latest Bank of England meeting showed some policy makers saw a risk that more bond purchases may be required.
Fed Chairman Ben S. Bernanke holds a press conference later.

The major market avrerages are down with narrow losses in the opening minutes of trade. Tech, which is the largest sector by market weight, is a drag after it offered leadership in the prior session; the sector is currently down 0.2%.
Utilities stocks are actually in the worst shape this morning. As a group, utilities plays are down 0.8%. Electric utilities like Duke Energy (DUK 18.64, -0.16) and American Electric (AEP 37.57, -0.31) have been the heaviest drags on the sector.

U.S. stocks were poised to open little changed Wednesday, ahead of the Federal Reserve's latest interest rate decision.
Stocks rose Tuesday, as investors anticipated that Greek Prime Minister George Papandreou would win a confidence vote and be able to push ahead with more austerity measures.
After the closing bell, Greek lawmakers voted to support Papandreou's government. The win boosted the likelihood that the country will be able to secure a bailout package and avert a default.
But Tuesday's optimism shifted to caution early Wednesday, as investors awaited the Fed's latest interest rate decision. Most expect the Fed will keep rates steady but investors are keen to hear what Chairman Ben Bernanke has to say about the economy.
Economy: The central bank will conclude its two-day meeting on Wednesday, with the interest rate decision being announced at 16:30 GMT Bernanke's press conference starts at 18:15 GMT.
Companies: Shares of Adobe Systems Inc. (ADBE) slumped more than 5% in premarket trading. The software maker posted a 54% jump in second-quarter profit after the market close Tuesday, but issued a revenue outlook that fell short of expectations.
Carmax (KMX, Fortune 500) reported first-quarter earnings that widely beat expectations, sending shares of the company 8% higher before the opening bell.
Royal Phillips Electronics (PHG) warned that second-quarter profit would drop sharply and miss expectations. U.S.-listed shares of the electronics maker tumbled 13%.
Shares of BB&T Corp. (BBT, Fortune 500) climbed more than 1% after the company announced a third-quarter dividend of 16 cents late Tuesday. The company will release second-quarter earnings Wednesday morning.
FedEx (FDX, Fortune 500) reported earnings and sales that topped forecasts, and hiked its outook. That sent shares of the shipping company up 3% in premarket trading. Shares of rival UPS (UPS, Fortune 500) edged up 1.3%.
Bed Bath & Beyond (BBBY, Fortune 500) will report quarterly results after the market close Wednesday. The home decor retailer is expected to earn 62 cents a share.
World markets:

Oil for August delivery slipped 26 cents to $93.91 a barrel.
Gold futures for August delivery added 30 cents to $1,546.70 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 2.95% from 2.99% late Tuesday.

Initial bids still at Y80.10/00, behind at Y79.95/90, a break opens Y79.70/65. Offers waiting at Y80.35/40.

The pound fell for the first time in four days against the dollar as minutes of the latest Bank of England meeting showed some policy makers saw a risk that more bond purchases may be required.
The euro declined against most of its major counterparts amid speculation Greek Prime Minister George Papandreou will struggle to pass additional austerity measures, even after winning a confidence vote last night.
Papandreou will seek approval next week for a 78 billion-euro ($112 billion) package of budget cuts and asset sales to stave off the threat of default.
“Markets are refocusing on the fact that the euro zone has dodged the bullet in terms of the confidence vote, but now we are looking forward to the austerity vote,” said Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “Whether the response will continue to be the case for the austerity measures next week is a little bit more questionable.”
The International Monetary Fund, contributor of a third of the bailout money for Greece and the two other euro-area countries that have received bailouts, Ireland and Portugal, has warned European Union leaders that a failure to take decisive action on the debt crisis risks triggering “large global spillovers.”
Gains by the dollar may be limited as the Fed ends a two- day policy meeting and Chairman Ben S. Bernanke holds a press conference. Policy makers will keep the benchmark at zero to 0.25 percent, where it’s been since December 2008.
The committee will “firm up” language around keeping borrowing costs low for an extended period and apply that to its balance sheet as well, BNP Paribas SA analysts led by New York- based Ray Attrill wrote in a note to clients.

EUR/USD
Offers: $1.4420, $1.4440, $1.4480, $1.4500,
Bids: $1.4340, $1.4305/1.4290, $1.4275/70, $1.4250

Investors taking a cautious stance ahead of a meeting of the U.S. Federal Reserve that might provide cues about the central bank's next moves to support the economy.

Cable extends losses to $1.6130. Bids seen into $1.6130 ahead of earlier reported stops below this level. A break to open a deeper move toward $1.6110/095.

EUR/USD $1.4450, $1.4400, $1.4350, $1.4340, $1.4320, $1.4300, $1.4275, $1.4500

Drops to $1.6150 on market react to dovish BOE Minutes, reacting more to the accompanying comments than the vote outcome, which was as expected. Market had been expecting a dovish release so was seen well positioned for the release. 

7 BOE MPC Voted For Unchanged Bank Rate; 2 For Hike ;
BOE MPC Dale, Weale Voted For 25Bps Rate Hike ;
SOME MPC: More QE May Be Needed If Downside Inflation Risks Realized ;
BOE MPC Broadbent Voted For Unchanged Policy At First Meeting ;
Only two members of the Bank of England's Monetary Policy Committee voted to hike Bank Rate at the June meeting and the possibility of  further quantitative easing was mentioned by some members, the minutes showed.

Nikkei  9,629  +1.79% 
Hang Seng   21,854  +0.02% 
S&P/ASX   4,533  +0.54%
Shanghai Composite   2,649  +0.11%

The euro retreated from its highest in a week after Greek Prime Minister George Papandreou won a confidence vote amid investor concern that the government will struggle to pass austerity measures to stave off default.

The dollar fell as stocks and commodities rose, reducing demand for a refuge as the Federal Reserve begins a two-day policy meeting.
The greenback weakened to the lowest versus the euro in almost a week. The shared currency rose as European leaders said a Greek default can be avoided amid speculation Prime Minister George Papandreou will win a confidence vote today. 
The euro rose as Greece’s Papandreou seeks to secure multiparty support for his government’s austerity measures. That is a condition for receiving aid needed to avoid a default. 
Greece needs parliamentary approval of a 78 billion-euro ($112 billion) package of budget cuts and asset sales.
The greenback remained weaker as National Association of Realtors data showed sales of existing homes decreased in May to the lowest level in six months.  Purchases of existing U.S. homes fell 3.8% to a 4.81 million annual pace last month, in line with estimates.
Meanwhile, economists forecast the Federal Open Market Committee will keep the benchmark interest rate at zero to 0.25 percent tomorrow, where it’s been since December 2008. 
Australia’s dollar declined after the nation’s central bank said domestic data had not added “any urgency” to the need for policy adjustment and it may be “prudent” to keep rates unchanged, according to minutes released today of a June 7 policy meeting.
The pound weakened as Bank of England Markets Director Paul Fisher said further bond purchases to stimulate the economy are possible.

Resistance 2: Y81.00 (Jun 3, 15 and 16 high) 

Resistance 3: Chf0.8520 (Jun 20 high)

Resistance 3: $ 1.6400 (resistance line from May 2)

Resistance 3: $ 1.4550 (area of Jun 10 high, the top border of the channel from Jun 16)

08:30 UK BoE meeting minutes (08-09.06)