[AndrewWoo]

The FOMC did not come out with any major changes in its statement, but delivered enough subtle differences to help walk a very narrow tightrope, marginally supporting USD: they did not change any of the timing or size of their quantitative easing or credit easing (QE/CE) programs, yet they tweaked their statement just enough to acknowledge inflation and balance sheet concerns.

Very small changes (USD supportive)
(1) Inflation, explicitly: they very slightly "hawked up" the inflation talk. Instead of talking about "...risk that inflation could persist for a time below rates that best foster economic growth" (as they did in April 29th), they noted that "The prices of energy and other commodities have risen of late", and that they expect "...inflation will remain subdued for some time." They also changed a reference from "increasing economic slack here and abroad" to "substantial resource slack". Such relative (and very slight) hawkishness is also marginally USD-supportive.

(2) Balance sheet: The Fed acknowledged concerns about the size of the balance sheet, which is USD-supportive. They wrote about the balance sheet that they will "make adjustments to its credit and liquidity programs as warranted." The point clarifies that the Fed is aware of the concerns around the huge expansion of the balance sheet, which has been one of the underpinnings around the recent bout of USD weakness; markets are concerned that the massive increase in the balance sheet would mean inevitable inflation down the road.

What they did not change
(1) The size/timing of the QE/CE programs: the amount of MBS, agencies, and Treasuries remained the same, as well as the timing of those purchases.

(2) Lack of exit strategy: as before, the FOMC did not hint at plans around exit strategy from these programs. On the macro merits, growth is still too weak to begin actively planning around pulling back QE/CE programs.

The initial reaction to the statement has been slightly USD positive. But on balance the changes in the statement were still fairly small, and in many ways the statement kicks the can down the road; the more difficult policy decisions around changing course, which would substantially impact FX, are put off for now.