SYDNEY, Dec 17 (IFR) - OVERNIGHT NDF RANGES AND CLOSING NY NDF PRICES UNAVAILABLE Two risk flips post FOMC; USD wins out Market Briefs * US Fed raises FF rate 25bps, sets RRP rate at 0.25%, sees inflation rising to 2% target by 2018 * Wall St rallies as Fed points to gradual tightening * Fed's Yellen: if inflation failed to rise & USD stabilized would take appropriate action, doesn't contemplate neg rates * U.S. housing starts surge, permits hit 5-month high * Markit Mfg flash PMI even worse than expected, 3-year low of 51.3 * Dollar Libor highest since early 2012 before Fed meeting * EIA- wkly crude stocks up 4.8 mio bbls vs f/c of 1.4 mio bbl draw * Germany plans to borrow more in 2016, to repay debt, refugee costs - RTRS * Merkel wants to avoid "Brexit" but won't compromise core EU principles - RTRS * Fitch Downgrades Brazil to 'BB+', Outlook Negative; * Fitch downgrade reflects deep recession, adverse fiscal developments, political uncertainty * Brazil FinMin: says loss of investment rating is 'serious', silent after asked if he will stay in position * Moody's says LatAm banks are less resilient to withstand stressed conditions than other emerging markets Macro Themes in Play Fed hikes rates, dot plot not as dovish as expected; 2016 (1.375%) and long run (3.5%) Fed Funds projections left unchanged; dollar bulls got result they wanted but couldn't make much happen; markets now dominated by position trimming Yellen statement more balanced; highlights risks from strong USD, overseas weakness; Fed sees 4 rate hikes for 2016 but futures market only pricing 2 Oil down hard on storage build; CAD falls to 11 yr lows Stocks rally, AUD, EM firm on hopes of general USD weakness into year end Looking Ahead - Economic Data (GMT) * 21:45 NZ GDP Production QQ* Q3 f/c 0.8%, 0.4%-prev * 21:45 NZ GDP - Annl-Avg, Prod-Bas Q3 f/c 2.7%, 3%-prev * 21:45 NZ GDP - Annual* Q3 f/c 2.3%, 2.4%-prev * 21:45 NZ GDP Expenditure QQ* Q3 f/c 0.8%, 0.2%-prev * 23:50 JP Foreign Bond Investment w/e 73.1b-prev * 23:50 JP Foreign Invest JP Stock w/e 104.6b-prev * 23:50 JP Exports YY* Nov f/c -1.5%, -2.1%-prev * 23:50 JP Imports YY* Nov f/c -8.3%, -13.4%-prev * 23:50 JP Trade Balance Total Yen* Nov f/c -446.2b, 111.5b-prev Looking Ahead - Events, Other Releases (GMT) * No Significant Events Currency Summaries EUR/USD * Quiet in Europe's morning, a bit heavy into NY, opens near 1.0925, dips near 1.0910 early * Dip bought and pair range trades around the 200-HMA before lifting a bit into the Fed * Pair spikes lower on rate hike headline, 1.0888 low made but losses erased quickly * USD longs don't get the help they needed and unload, 1.0960/70 res cleared * Rise accelerates, 1.1000 resistance cleared and lift extends to 1.1013 high * Late USD rebound sees pair back near 1.0970 USD/JPY * Knee-jerk USD/JPY pop past 122.23 pivot on Fed's hike & fairly firm DOTs * Gains shed quickly as modest inflation SEPs raised doubts about DOTs * USD/JPY's post Fed/intra-Yellen presser low of 121.38 found the Cloud top * Back near unch from before the FOMC at this writing * Crosses doing much better than USD/JPY amid risk bounce, sans oil * EUR/JPY at new intraweek highs. AUD/JPY up by Tenkan, Kijun @88.60 * J weekly investment flows & Merchandise Trade data tonight * N225 futures +2.4% last & at day's highs post FOMC GBP/USD * GBP/USD drops to low by 1.4960 post-Fed then pops to 1.5100, ends NY by 1.5065 * Fed 25bp hike seen dovish at second glance, inflation f/c below 2% until 2018 * Yellen says if Fed inflation theory not baring out would give us pause * EUR/GBP gains as dovish tilt favors EUR, UK Brexit weighs on GBP * Cross ends NY 0.7290 below daily high at 0.7305 * Fed Rate Hike Color w/Stmt: USD/CHF * EUR/CHF lower after ZEW, (PPI Tues) ahead of the FOMC announcement * Swiss ZEW rose to 16.6 in Dec, from zero in Nov * Outlook expectations bounce back, majority surveyed rate economy as 'normal' * EUR/CHF fell to 1.0761 before mostly-as-expected FOMC squeezed EUR/USD * DOTs firm, but inflation targets tame & Yellen emphasizing gradualism * USD/CHF back inside Cloud: base at 0.9781 next pivot. M-T up TL at 0.9740 * Swiss SECO and KOF forecasts are out Thur USD/CAD * O/N range 1.3729/79, Noram range 1.3740/3848, Close 1.3774, NY +21 pips * Brent crude -3.3%, WTI -4.1%, alum. +0.9%, copper +0.95%, gold +1.28% * AUD/CAD +1.21%, 0.9992, CAD/JPY -0.34%, 88.35, EUR/CAD ) +0.8%, 1.5126 * DXY -0.45% (-0.38% in NY) US stocks +0.88/1.03% (S&P +0.46% in NY) * Huge influx of investments - Int'l Secs Trans +18.9bn [page:2417] * FOMC executed:"dovish hike" dot plots tweaked, Yellen presser dovish AUD/USD * Quiet in Europe & NY's morning, pair hovers near 0.7200 area * Some bull pressure after Europe's close sees near 0.7225 into the Fed * Spike down seen on rate hike but loses erased quickly * Broad USD weakness on Yellen pressure sees 10-DMA pierced * Pair retains bull stance late and threatens break above 0.7290/00 res zone * Techs bullish, RSI biased up while 55 & 100-DMAs support * RBA bulletin a bit of a risks in Asia NZD/USD Dips below 0.6750 well contained in Europe & early NY, bounce seen after Europe close Lift sees pair above 0.6780 into Fed, spike down to 10-DMA on hike headline Losses erased quickly as USD longs don't get what they need & unload Pre-Fed levels cleared & lift accelerates, Dec 15 high cleared, 0.6840 neared late Techs bullish, RSIs biased up & bullish outside candle on daily chart, 10-DMA supports NZ Q3 GDP the next kiwi risk, if above f/c 200-DMA & Oct high likely tested Brazil sacrifices rating in elusive bid for growth Today's Fitch downgrade of Brazil shouldn't surprise anyone given the government's decision yesterday to sacrifice fiscal prudence for growth, while sidelining FinMin Levy in the process could add further harm to the country's credibility. After S&P's downgrade in September, Brazil remained a candidate for another junk rating due to its unique mess of high inflation, economic contraction, fiscal slippage and political tumult. Tuesday's reduction of the 2016 fiscal surplus target made that worse by creating a rift between President Rousseff and the fiscally hawkish Levy. Her aim was to shore up the costly 'Bolsa Familia' social program, perhaps to stimulate the moribund economy. A laudable goal, perhaps, but what she wants and what Brazil can afford might be two different things. The price of this lesson ultimately may be Levy, along with the rest of Brazil's credibility.