The Federal Open Market Committee’s decision yesterday to change the composition of its balance sheet as opposed to expanding its size has had reverberating impact around the globe, with higher yielding assets falling sharply across the board. European markets mirrored the price action exhibited late in the North American session yesterday, a disparaging sign for higher yielding and risk-correlated assets. European equity markets were down as much as 5%, at the time this report was written, while U.S. equity market futures pointed towards a much lower open, as much as 3% lower. Similarly, on the surge in concern over global growth, NYMEX WTI crude oil was trading over 5% lower as well. The signal markets are giving is clear: risk-aversion is in full stride, and this is the beginning of a leg down across global financial markets. The built-up expectations of another round of quantitative easing, in the form of another round of balance sheet expansion, were deflated quickly when the FOMC’s monetary policy statement was released shortly after 18:15 GMT. While there was a sharp but quick rally in higher yielding assets, such as the Australian Dollar, U.S. Dollar strength quickly ensued. Dollar strength has been essentially unabated since late in the North American trading session on Wednesday. In the currency realm, the Australian Dollar was one of the worst performing currencies in the overnight, falling by over 2.7 percent, at the time this report was written. As the highest yielding major currency, the Aussie faces significant volatility when markets panic. Over the past three weeks, the AUD/USD has fallen by nearly 900-pips. The Aussie appeared to be rebounding just shortly ahead of the North American open, although further losses are on the horizon as the global economic climate continues to deteriorate.

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