The Fed failed to cut interest rates by 50bp, causing US stocks and carry trades to plummet and the dollar to strengthen significantly.

Kathy Lien's opinion is that the Fed will most likely disappoint the market by under delivering. Even though food prices remain high, oil prices have tapered off, which means that the Fed may have slightly more flexibility in lowering interest rates.

The odds for a half point rate cut are less than 25 percent because the non-farm payrolls figure was not bad enough to warrant a larger rate cut.

The dollar has been strengthening for the better part of this week. Revisions in payroll forecasts and the recent rally in the US dollar indicates that traders are not expecting payroll growth to be at or below 80k. The reference point here is clear and we could even see dollar weakness if payrolls are 100k or less.

According to the ADP employment report, US companies added 189k jobs in the month of November, which was three times greater than the market’s forecast. This number is fishy but is so strong that it cannot be dismissed.

Fed fund futures are now pricing in a 50 percent chance of a half point rate cut.

The market is currently pricing in a 60 percent chance of a quarter point rate cut by the Bank of Canada even though economists do not expect a move.

A report on the seasonality of the US dollar found that the dollar has a greater tendency to fall in the month of December. The risks are higher this year with problems in the financial sector still plaguing the US economy.

The US dollar has rebounded but don't be fooled into thinking that this is a bottom, because US fundamentals continue to point to further dollar weakness.

Carry trades are back, but USD/JPY is struggling to sustain its gains above 110, which suggests that further gains in carry trades may be limited.