The expected rate rise endorsed by the FOMC at the end of its 2-day meeting was fully expected, so why has the Dollar appeared to react with surprise ? The short answer is that the FX market is pretty stupid. The Fed raised its 2019 rate projection from December’s figure of 2.7% to 2.9%, and for 2020 to 3.4% from 3.1%. Naturally, for the FX market, this is a sound enough reason to buy Dollars immediately. No-one will remember this in 2 weeks time, let alone 2 years from now. However this apparent knee-jerk reaction hides a fundamental truth, which is that the market is nervous and a little fearful. The bull run in Stocks looks like it’s finished. This does not necessarily mean the bears are now in control, it is far more likely to mean that no-one is in control. We expect a period of confused consolidation with perhaps a little more weakness to the downside. There is no pressing reason to buy Stocks at these levels. There is every reason to expect that there will be opportunities to buy more cheaply in the next 2-3 months and that volatility will increase until a consensus view develops.