Wednesday, September 22, 2010

Dollar Depreciates as Federal Reserve signals more money is on the way to the marketplace...

Dollar Slides in Wake of Fed Statement

The dollar stumbled broadly Tuesday after the Federal Reserve said it stood ready to kick-start a slowing U.S. economy.
The euro rose sharply, racking up gains of more than 1.5% against the dollar, while the greenback wilted against the yen, briefly dipping below 85 yen, considered by some analysts to be Japan's threshold for the currency's strength after last week's market intervention.
"What we see is the door being kept open to further quantitative easing," Michael Woolfolk, senior currency strategist at BNY Mellon in New York, said of the Fed's possible fresh round of economy-stimulating asset purchases.
"Quantitative easing is broadly viewed to be corrosive to a currency's value, and so with the increased probability of easing measures, the knee-jerk reaction in the market is to sell the dollar," he said.
Here is a video explaining the concept of "quantitative easing"...hang with it for a few minutes.  The first part is just an introduction but it gets better. I promise!!

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