The Fed's comments say a number of different things. A good question to ask wheather or not the bond markets are in agreement with the fed. Recently it would appear, that the Feds have diverged from the current consensus, and from a historical standpoint, from over summer, the Feds would hold as the markets priced in cuts, which is a clear reflection of action stemming from divergence of sentiments. Though that is not to say that sentiment has lost is footing, there is much uncertainty to the actions of a hold, much which I feel Bernake may not wish to risk his reputation on. The Feds have been testing the markets by adding in reserves and watching how financial have improved, only to the possible dismay of mixed signals. It is in my opinion that the US economy is quite resilient, but as i said sentiment has not totally lost its hold as a 25 BP or 50 BP is not surprising, what goes against a 50 BP cut is the fact that inflation is prevalent. Though obviously the fed has not been so bold to give this much transparency. The current inflation data coming in will keep the Feds decision limited to a 25 BP cut to hold, unless CPI and PPI numbers are truly tame. Which in turn would lead to another 50 BP in a preemptive measure.

In terms of currencies, this would be a great buying opportunity as a bottom forms against the Euro. The currency markets is already pricing in a less cut to hold, will the bond markets follow suit today? most likely which will reflect in the shorter term interest rates...