What Today's Comments Mean

At first blush, it would seem that today's FOMC comments following the October meeting are hurting gold. Indeed, the negatives always come out before the positives regroup and cooler heads prevail.

We all knew that QE3 was ending. We've known that since the first tapering moves began. It was as inevitable as the first cool breezes of autumn.

But why would the dollar find such sudden strength? Many analysts are saying that the news released was more hawkish than expected. From our vantage point, that seems almost ridiculous.

The comments called growth moderate and, while it said labor utilization had improved, it also firmly pointed out that there was still underutilization but it is diminishing. We shall see.

The Fed also warned that, in spite of a huge decline in fuel costs, inflation was a concern. This language is new and it also set dollar bulls running. Dollar strength hurt precious metals, as we know, but it also dinged equities pretty hard. The committee essentially repeated the language from its September minutes.

Most tellingly - and a matter that many in the FX business seem to have overlooked - is that the FOMC said it would consider a wide range of information before raising rates. Just as an aside, the greenback has risen 6% since July.

That wide range is commonly thought to include an assessment of how Europe, Japan, China and a handful of other key economic partners are doing.

"The U.S. is a big bright spot in the world," said Stephen Cecchetti, professor of international economics at Brandeis International Business School in Waltham, MA, and a former New York Fed research director. "Europe is still struggling quite a lot, Japan seems to be up and down, and China's having some growing pains at this point."

We leave you with this thought:

Fed funds rate futures show the probability of a rate increase by the September 2015 FOMC meeting is about 42 percent, compared with 76 percent chance at the end of last month.

So, if anything has changed, it's that a rate increase is a good deal less likely than it was six weeks ago.

Yet, the dollar trades higher as if an increase is imminent, stocks stumble, gold tumbles.

Wait for the reaction to the hawkish analysts who still can't believe there is such a thing as interventionist policy.

Wishing you as always, good trading,