Loonie up as USA dollar declines against other currencies, stock markets fall

On top of the Fed, Friday also happens to be a so-called “quadruple-witching” day, a period of greater than normal volatility when options on stocks and indexes, and index and single-stock futures all expire, prompting investors to open new positions to replace expiring ones.

Banking stocks fell sharply, with Citigroup, Wells Fargo and JPMorgan Chase all losing about 2.5 per cent. The Nasdaq Composite ended the day down 66.72 points, or 1.4% at 4,827.23, but eked out a 0.1% gain for the week.

By midday, the Dow Jones Industrial Average fell 152.46 points, or 0.91 percent, to 16,522.28.

Bonds prices rose, pushing down the yield on the 10-year benchmark Treasury note to 2.16 percent.

Banking stocks continue to reel in the wake of the Fed decision as hopes that higher rates would translate to fatter profits on loans have been dashed.

“Yellen wants to make sure that the USA remains the driver of global economic health”, said Dan Veru, who helps oversee $5-billion as chief investment officer at Fort Lee, New Jersey- based Palisade Capital Management.

While analysts remain divided over whether the Fed will raise rates, the anticipation is already weighing on markets for everything from equities to energy producers to commodities. In an interview with Bloomberg, Matt Maley, an equity strategist at Miller Tabak & Co commented that investors will now start focusing on the problems that caused the correction in August after the Federal Reserve made its decision regarding the interest rates.

Worries about slowing growth in China, in particular, have roiled global markets in recent weeks.

“For the markets, it means more months of uncertainty, which investors do not like”, said Craig Erlam, senior market analyst at OANDA.

Members apparently want to see further improvement in the labor market and more confidence inflation will move back toward the 2 percent target before raising rates. The country’s main stock index, the Nikkei 225, slipped almost 2 per cent to 18,070.21, as traders fretted about the potential impact on Japanese exports stemming from the yen’s appreciation.

The Fed noted the decision to leave rates at record lows was not unanimous, as Richmond Fed President Jeffrey Lacker preferred to raise rates by 25 basis points. With high-frequency firms accounting for about half of trading in the USA , daily volume has tripled since the early 2000s and now regularly tops 6 billion shares.

At 8:44 a.m. ET (1244 GMT), S&P 500 e-minis were down 22 points, or 1.11 percent, with 418,465 contracts changing hands.