Dollar Dips Again after Fed discusses Printing Even More Money

[Pinalli]

The Dollar was down most of the day on Wednesday overall as safe-haven bids retreated due to investor confidence that the global recession is beginning to wane. The Dollar declined even further late in the day after minutes of the Federal Reserve's latest policy meeting showed the US central bank is considering an increase of its purchases of securities, a move that would further devalue the world's reserve currency. The concern with the meeting that most analysts had was that there are Fed members who believe that more toxic assets need to be purchased and that doing so will mean putting more dollars into an already flooded market.

[Pinalli]

Moody’s, one of the major credit rating agencies affirmed the Dollars “AAA” status “despite rising national debt” on Wednesday, sending the Dollar higher against most majors as credit worries eased. Also, on Wednesday, a regional Federal Reserve president had said that the Chinese informed him they were “concerned” over the US’s rising debt in a meeting held last week. Richard Fisher of the Dallas Federal Reserve in Texas said the primary concern of the Chinese is the Federal Reserve, the US’s Central Bank, financing spending by the treasury department which essentially amounts to printing money. While China is worried about hyperinflation, analysts agree that at this time the US economy is slightly deflated.

However, data released late in the session in online forex market showed that the inventory of unsold homes had increased in the US, stoking fears that home prices will continue to fall next month. The news dropped the dollar off of its highs and moved it negative against the Sterling.

At 11:45PM GMT, the Dollar was up .8% to the Euro to 1.3874, up .25% to the Japanese Yen to 95.26, down .45 to the British Pound to 1.5985, up .3% to the Canadian Dollar to 1.1194, up .5% to the Swiss Franc to 1.089 and up .1.13% to the Australian Dollar to .7775.