The Fed Hits Dollar
If there is a clear prejudiced the outcome of the last meeting of the Fed, that is the dollar. The growing concern about a deflationary scenario, in view of the price data published in recent months and the willingness to continue with a strongly expansionary policy have created a downward pressure against the main crossroads, turn the pressure on Bank of Japan will continue to defend the dollar against its currency, if it wants its recent interventions in a simple stay high in the bullish rally of its currency against the greenback.
Although the vision by the Fed’s economic situation remained practically unchanged, the emphasis on low inflation, is a clear indication that the weakness of the recovery of the world’s largest economy, is not the only reason for increasing stimulus measures. The message seems clear, inflation worries and despite defer a decision pending further references macroeconomic know showing some signs of improvements, especially in retail sales next month and reports of consumer spending in November will most likely be implemented steps of monetary expansion.
The tone of the Fed statement is not so surprising considering that the U.S. Central Bank firmly believes that the pace of recovery will be slow in coming quarters, with unemployment at very high levels and without inflationary pressures. The Fed seems to opt to wait for further deterioration before acting, even if what you want is to anticipate a further slowdown from our point of view, could be more logical to act before it materializes, because when you do, will be more difficult to correct.
Therefore negative expectations for the dollar from a fundamental standpoint, but we must not forget that in times of uncertainty like the present, the dollar has benefited from the increase of it, asserting their property of safe haven, something that could result if the economic situation worsens more than the discounted market today, despite the implementation of measures “quantitativism easing, the dollar could revalue. However, against other currencies also act as a refuge (yen, Swiss franc), whether it would be penalized.