In Advance of Fed Decision, Dollar Index Rises

Sara Patterson

By: Sara Patterson

Hours before the Federal Reserve is expected to announce a new stimulus plan, the Dollar Index advanced for the third time in four days. The Euro also stabilized with renewed hopes that the US will lower its interest rates.

Although the nation’s interest rates are already at near historic lows, the Fed is expected to reduce these rates further, a move that several analysts have already likened to Operation Twist, a 1961 strategy designed to adjust the yield curve. Republican leaders, however, have sent a letter to Fed Chairman Ben Bernanke urging him not to implement a further stimulus plan, stipulating that it might harm the economy more than helping it.

There is no question that the Dollar has been harmed by the quantitative easing of late and that short-term yields have suffered a severe drop. The expected reduction in interest rates would be with the express goal of inspiring a rebound in the US housing market, a factor which is undoubtedly an essential component of any long-term and wide-reaching financial improvements.

The Greek government will also make an announcement about its intended austerity measures this week. On the heels of Italy’s credit downgrade, eyes are firmly planted on Europe, as regional banks strain in response to the crisis.

About the Author
Sara Patterson
Sara Patterson has a Master’s Degree in political science and enjoys analyzing both current events and the international markets to get a fuller perspective of the currency market. Before turning to financial writing, she taught English writing skills to high-school age students. Sara’s work has been published on various financial and Forex blogs.
Comments

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments
Add Comment

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.