Dollar Drops Most in Four Weeks as Federal Reserve to Buy Bonds

[cory777]

Source: Bloomberg

Nov. 6 (Bloomberg) -- The dollar fell the most in four weeks against the currencies of six major trading partners after the Federal Reserve said it will pump more money into the U.S. financial system to spur inflation and employment.

The greenback slid versus 15 of its 16 major counterparts after the Fed said it will buy $600 billion of U.S. Treasuries through June. It pared losses after data yesterday showed payrolls grew more than forecast. The Australian and Canadian currencies reached parity with the dollar as investor appetite for higher-yielding assets rose before leaders of the Group of 20 nations discuss currency policy in Seoul next week.

“The global market dynamic is still supporting dollar weakness,” said Sacha Tihanyi, a currency strategist at Bank of Nova Scotia in Toronto, Canada’s third-largest lender. “The Federal Reserve’s statement may be favorable for the U.S. economy, but it’s unfavorable for the U.S. dollar.”

The Dollar Index, which IntercontinentalExchange Inc. uses to track the dollar against the currencies of six major U.S. trading partners including the euro and yen, slid 0.9 percent to 76.548, from 77.266 on Oct. 29, in the biggest weekly loss since Oct. 8. It touched 75.631 on Nov. 4, the lowest level since Dec. 8, 2009.

Read more: http://www.businessweek.com/news/2010-11-06/dollar-drops-most-in-four-weeks-as-federal-reserve-to-buy-bonds.html

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News that Matters http://activistnews.blogspot.com/

[denem]

1. Hey all you protectionists, celebrate.

You got what you wanted: Higher prices on (most) imports, especially oil. Don't worry about the poor having to cough up at the till. In ten years US manufacturing will have risen from the dead! Why bother to leave the WTO when the dollar is falling like a stone? Exporters lerv the cheaper prices when they can aggressively market good-ol'-Made-In-the-USA merchandise and services. Even Dennis should be pleased.

First on the menu for price hikes: food.

[JDPriestly]

3. We all need to buy only what we need. That keeps prices down.

Ours is an unemployed, aging society. Unemployed and retired populations do not consume as much as working, younger populations.

The low interest rates hurt the rich just as much as the poor, especially now that no one in their right mind would trust Wall Street enough to invest money in stocks.

I would like to see a lot more community gardens in which people can grown some of their own food.

[madrchsod]

6. working, younger populations are`t consuming either

no wage increases for the foreseeable future and increasing inflationary trends....welcome to the 1930`s.

[denem]

11. Thank you for your thoughtful response.

My sarcasm was directed to the advocates of magic overnight fixes to systemic problems. The so called "costs of adjustment" of sudden shocks, fall, as always, on the poor. As someone who has been there, one single quarter can the the difference between having something to eat and nothing. Rebuilding manufacturing, restoring well paid work, job security and dignity is a long term endeavor that will have to be pursued with determination year in, year out. Yes the policy settings have to be right. No a 25% fall in the dollar is not much of an answer.

[EFerrari]

19. Not exactly.

New $600B Fed Stimulus Fuels Fears of US Currency War


The Federal Reserve will pump $600 billion more into the US economy and keep interest rates at historical low levels. The short-term impact of the Fed’s move, known as quantitative easing, has been a jump in stock prices across the globe. Many nations, however, have accused the United States of waging a currency war by devaluing the dollar. We speak to former Wall Street economist and University of Missouri professor Michael Hudson. "The object of warfare is to take over a country’s land, raw materials and assets, and grab them," Hudson says. "In the past, that used to be done militarily by invading them. But today you can do it financially simply by creating credit, which is what the Federal Reserve has done."

http://www.democracynow.org/2010/11/5/new_600b_fed_stimulus_fuels_fears

[TomClash]

2. Good news

Keep sliding.

[sendero]

4. Gee...

.... my precious metals investments are skyrocketing! Surprise, surprise, surprise!

[madrchsod]

5. good news...

the chinese are going to be very upset...

[SlimJimmy]

7. How is devaluing our dollar good news? How is inflation good news?

[naaman fletcher]

8. It's not..

We have a totally retarded financial system that doesn't pass simple questions like yours. The answer is that the government is printing money out of thin air. The money then goes to the banks who borrow it as basically zero percent, but loan it out at like 4%. It's all for the banks.

[smiley_glad_hands]

9. Makes our products and services cheaper.

Puts pressure on the chinese to decouple the yen from the dollar.

Inflation in the US is not a problem in the short term, it is in china though.

[denem]

12. Food prices, oil prices will be a problem, period.

"Makes our products and services cheaper" OVERSEAS, not here.

[Unvanguard]

16. It's economic stimulus. It means more American goods get bought.

The risk the US economy faces now is deflation, not inflation.

[SlimJimmy]

18. Stimulus my ass, it will spike inflation in the long term and that is seriously bad

news for our economy. You can't FLOOD the market with dollars and expect good things to happen.

[MrTriumph]

10. The worst economic team since Hoover?

x

[denem]

13. Cough.

The worst banking crisis since hoover, with a familiar outcome, private banks severely ration credit, strangling the real economy. Whether a bank goes under or simply stops lending, the impact is much the same.

[defendandprotect]

14. Hyper inflation ahead ....???

[Unvanguard]

15. Good; we could use it. n/t

[sarcasmo]

17. Here comes Inflation, thanks Federal Reserve.