Thursday, 19 March 2009

Forex traders punish dollar after QE

The Euro shot up after the FOMC announcement in a move that echoed the move in early December when the Fed dropped the fed funds rate to effectively zero. Clearly some large forex players are sending a clear message to the Fed that they are nervous about the longer term consequences of the new QE policy. One has to wonder whether some of the selling of the US currency yesterday was coming from the Chinese central bank to underline the concerns expressed by Premier Wen last week about his country’s exposure to US dollar denominated Treasuries.

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