Investors until this dollar ignite a 0.8 percent decrease from $ 1.3876 per euro at 8: 38 a.m. in New York, $ 1.3769 yesterday. Marked the end of three days straight as markets analyzed the potential impact of the Fed buying Treasury Treasury bonds and other assets in order to increase the liquidity of the financial system earnings decline.
Source: Bloomberg
Filed under: Forex Round Up, USD.Decipher and understand the reasons for the change in the dollar is worth its weight in gold. There are so many plots and subplots to consider it. Yesterday, we had helicopter Ben undermined credibility. Supposedly, decision-makers have sent a survey asking senior Treasury that expectations of dealers and size affect more acquisitions of goods. Ben, you do not know how, or how apply additional quantitative easing in the market? Reminds me not step to follow him in battle. Now, with the market shows no sustainable concern yesterday
In a note to clients, Morgan Stanley said that it was cutting its objective dollar United States suggests that the dollar may fall to its lowest level against the euro since December 2009. The greenback is likely to reach $1.46 per euro at the end of the year and trade has changed little in 81 yen, Morgan Stanley, said in a note addressed yesterday to customers.
After three days of gains, the dollar fell as taken profits had reservations in decline. The Loonie has lost 0.3% C $ 1.0230 by dollar at 7: 44 am in Toronto, compared to C $ 1.0200 yesterday.
In a few weeks, the United States could overtake China as currency manipulator world's largest. Don't get me wrong: I'm not predicting that the United States will officially war global currency. However, I believe that the quantitative easing program expansion of Federal Reserve Bank (dubbed QE2 investors) will exercise the same negative impact on the dollar as if the United States had followed by China and intervened directly in the Forex market.
For the last month or so, markets have been preparing for QE2. At this point he is seen as a near certainty, with a Reuters poll showing that all 52 analysts who were interviewed believe is inevitable. On Friday, Ben Bernanke eliminated any remaining questions, when he declared that, "it seems — everything being equal — is a case for further action."At the moment, it's just a matter of course, with estimates of markets ranging from $ 500 billion to $ 2 trillion. that would bring the total quantitative easing maybe $ 3 trillion, exceeding $ 2.65 trillion in China's foreign exchange reserves and earn the distinction of being the largest, sustained currency intervention in the world.
The Fed faces the dilemma that their initial quantitative easing program not significantly stimulate the economy.He brought the liquidity for the credit and financial markets – stimulating the increase in assets prices – but this does not translate into business and consumer spending. Thus, the Fed is planning to double down on your bet, comforted by the low inflation rate (currently in a 50 year low) and a stable balance. In other words, she feels that have nothing to lose.
Unfortunately, it is difficult to find someone who believes that QE2 seriously will have a positive impact on the economy.Most expect that goes from buoys financial markets (stock and commodities), but that will achieve little if anything else: "The real problem with the economy is a lack of consumer demand, not the availability of bank loans, the interest rates of mortgage or large amounts of cash held by companies provide more liquidity into the financial system through QE2 won't fix the balance sheets of consumers or unemployment."The Fed is hoping that greater expectations of inflation (bond prices already reflected in lower) and low-income incite consumers and businesses in action. course also is hopeful that a dollar cheaper will lead the GDP by narrowing the imbalance of trade.
