Dollar Rises After FOMC Meet
Jan 29th, 2009 | By Doug Casey | Category: Financial NewsIn the currency market, the dollar moved higher against the euro. Late Wednesday, the euro was trading at $1.315 vs. $1.3218 on Tuesday.
This month’s Federal Open Market Committee policy meeting was far less anticipated than earlier ones have been. Interest rates can’t be shoved any lower, and any rise in rates won’t come until inflation picks up. So the accompanying rhetoric was parsed.
To no one’s surprise, the Fed did leave interest rates alone, and in its remarks said that it will remain committed to a credit easing path and is prepared to buy U.S. Treasuries if that seems warranted.
Further, the Fed admitted the economy is weakening, and that it is worried about deflation, but it still expects a recovery in the second half of the year.
Traders felt the statement was more significant for what it didn’t say that what it did. The Fed did not detail any of the non-conventional easing methods under consideration.
That was significant, according to Marc Chandler, of Brown Brothers Harriman, who wrote that, “We had anticipated that any new details on quantitative easing would have been dollar-negative.”
Kathy Lien, director of currency research at GFT, added that, “In the long run, the Fed’s lack of commitment is still dollar bullish. More action will be needed and delaying the inevitable could hurt more than it helps.”
Source: Dollar Rises After FOMC Meet
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