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For traders (FX and capital market), the interest is not in seeing discussion of a rate hike. There is little to no expectation of that until at least mid-next year. The real market moving aspect of this event is any hint that the Fed’s as-of-yet unrivaled stimulus drive will end – just as speculation of Bank of Japan and Bank of England efforts ramp up. The consensus is for the Fed to play it safe and not provoke a highly-sensitive equity market into a tumble with talk of a clear time frame for a stimulus exit. However, there is plenty of opportunity for the masses to extract that information for themselves. With this Fed decision, we have more than just the policy decision and statement. This quarterly event brings with its forecasts for growth, inflation and interest rates along with Bernanke’s press conference. And, it is interesting to note that the time between the policy decision and ‘presser’ has been reduced to 30 minutes – likely an effort to stem negative speculation on perceptible change.

British Pound Awaits UK Budget, BoE Go Ahead for Stimulus

Risk trends could carry significant influence over the sterling’s next move, but there is plenty of native event risk to make a systemic shift behind the currency all on its own. The morning opens up with top-tier – but ‘standard’ – event risk. The February labour data is known for its influence over volatility and leading assessment of general growth trends. However, it is the least influential event on the UK docket. The Bank of England (BoE) minutes cross the wires at the same time, but its report on the vote count for more stimulus at the last policy gathering (last go around, 3 members voted for more gilt purchases) will be seen as a shot in the competitive stimulus wars. Top billing, though, goes to Chancellor Osborne’s 2013 budget. We see how committed the government can hold to its austerity drive, reflection on economic collateral damage and targets for both. Where traders are really looking though is any allowances for the BoE to bolster its stimulus effort.

Euro Tests Four Month Lows as Cyprus Plan RejectedThe unprecedented Cyprus bailout preconditions have effectively revived fears of systemic Eurozone financial troubles. This past session, the Cypriot Parliament firmly rejected an adapted proposal of the bank levy – taking money from deposits to partially fund the country, banking systems rescue – that President Anastasiades, Finance Minister Sarris and EU officials initially agreed to. Though accounts under €20,000 would have been spared, the measure received 36 votes against, 19 abstentions and no votes in favor. This situation is a mess. A second vote on a revised program is likely in the coming days. Otherwise, a return to Euro-area authorities will not likely yield any more favorable conditions as there is an adamant stand against another Greek-style rescue. If Cyprus passes a bank level, it will set a dangerous precedent for fragile confidence in Greece, Spain and Italy. And, as we wait, questions churn as to whether the ECB will cut off liquidity to Cyprus banks…

Japanese Yen: Kuroda Takes the BoJ Reins, Market Waiting

It’s official. The Bank of Japan (BoJ) is now headed by Haruhiko Kuroda. Now it is time for the vocal stimulus supporter to offer satisfaction to those speculating on a significant escalation of the central bank’s efforts. There is no doubt a contingent of the market is expecting immediate moves by the BoJ – moving forward the 13 trillion yen-per-month program would be most influential. But so far Kuroda is mum for the holiday.

New Zealand Dollar Weighs RBNZ Warnings against 4Q GDP

Trade – a vital component of the New Zealand economy – proved weaker in the fourth quarter than economists had expected with a NZ$3.255 billion deficit. That is notable, but not as influential as the unsettled risk theme that lies before us nor tomorrow’s 4Q GDP release. The economy is seen growing 0.9 percent last quarter according to the consensus forecast, but given RBNZ Wheeler’s warnings, a miss could stir bears.

GoldClimbs a Fourth Day, Focus Shifts from Euro Risk to Stimulus

A slow return of systemic risk in the Eurozone. The possibility that the BoJ and BoE are on the cusp of new swells in stimulus. Concern that the Fed may lay out its exit plan. There is a lot going on for gold. The fourth consecutive advance for the precious metal is riding on the Cyprus news. Yet, top concern Wednesday is what the Fed does. If there is a rough QE exit time frame, this is another benchmark that will suffer.

**For a full list of upcoming event risk and past releases, go to www.dailyfx.com/calendar

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--- Written by: John Kicklighter, Chief Strategist for DailyFX.com

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