USD Slightly Bid on Light Volumes

Light volumes are likely to characterize the remainder of the Asia Session with China and Australia out on holiday and no top tier data scheduled for release.  Earlier in NY, the greenback was slammed on the back of a dovish market interpretation from the FOMC’s statement, economic assessment, rate projections, and press conference. U.S. equities pushed higher immediately following the release of the official statement as the markets took solace in an extension for exceptionally low rates from mid-2013 to late-2014.

In FX, USD sharply fell vs. most G10 & EM currencies with EUR/USD hitting fresh 2012 highs around 1.3120 and USD/ZAR plummeting down to Nov. 2011 levels. Similar to headlines following yesterday’s NY Session close, another major U.S. positive earnings surprise (Netflix) provided some further support to risk appetites.

Elsewhere, the RBNZ held the OCR steady at 2.5%. Citing ‘reassuringly’ contained inflation, ongoing global growth uncertainty, and moderate domestic demand, New Zealand central bank Governor Alan Bollard said ‘it remains prudent to keep the OCR on hold at 2.5%’. This was a departure from Bollard’s comment in December – ‘is prudent for now’ – and suggests the RBNZ may be on hold longer than previously expected.

On the data front:

* Japan Dec. Corp Service Price Index increased +0.1% y/y is vs. no change expected with the prior -0.2% print revised higher to -0.1%.

* Japanese purchases of foreign securities total +Y235.3bln with Japanese investors selling net -Y76.1bln in foreign equities, selling net -Y76.1bln in foreign equities, buying net +Y233.8bln in foreign bonds, and buying net +Y77.6bln in foreign money market instruments

* Foreign investors were net buyers of Japanese securities as net+Y176.6bln in Japanese equities were purchased, net -Y363bln in Japanese bonds were sold, and net +Y711.8bln in Japanese money market instruments were purchased.

News flows:

* New Zealand P.M. Key says global economic outlook has deteriorated
* Key says government committed to returning to surplus by 2015
* Key says N.Z. economy expected to grow more slowly
* Key sees 2014-15 budget surplus of NZ$300mln-NZ$500mln
* Key says weak global growth to weigh on exports
* Key says global outlook makes surplus harder to achieve
* Key: Government to review surplus goal if worst-case occurs
* S. Korea Bok: Europe debt crisis weighed on S. Korea capital expenditures & consumption

 USD has managed to claw back some of its earlier losses so far in the Asia a.m. but price action may be contained within tight ranges with two major players out for the holidays.