St Louis Fed Gets the "Imploded the Dollar" Award
Dude, really. You blew up the dollar. There were like 35 cents there - give or take - when we actually had a chance and we almost made it but I guess St Louis Fedhead Bullard opened his mouth and said the Mayans were right, the Fed wouldn't raise interest rates until 2012 and the dollar died.
The dollar hovered near the year's lows against a basket of currencies on Thursday after slipping the previous day as economic indicators and a Fed official reinforced the view that U.S. rate hikes are still distant.
St. Louis Federal Reserve Bank President James Bullard said the Fed may start tightening financial conditions by selling assets it has accumulated rather than raising interest rates.
Bullard also noted that if the Fed followed its past pattern, it would not raise its target for overnight interest rates until early 2012, but also added there were reasons to think it may not wait that long this time.
Sue Trinh, senior currency strategist at RBC Capital Markets in Sydney, said the market was still digesting the rate outlook implications of Bullard's comments, noting that U.S. shares had closed in the red, struggling to take heart from the low rate prospects. .N
All in all, currencies that have benefited against the dollar on the low-rate view, including the Australian dollar and the euro, have faced headwinds this week.
"We're running into a bit of buyer fatigue. We've come a long way very fast and there's a huge overhang of longs in the commodity space and the risk space," Trinh said.
"So maybe positioning is somewhat saturated at the moment and that upward momentum is flagging somewhat."
The dollar index .DXY, a measure of its performance against a basket of six currencies, was flat on the day at 75.097, after dipping to a 15-month low of 74.679 on Tuesday and then rebounding sharply in the next session.
The euro was steady at $1.4952, after climbing more than half a percent on Wednesday. But it is struggling to break back above $1.5000 and forge new highs for the year above $1.5064.
No, but really he imploded the dollar. Who says that?! You aren't actually supposed to say "the Fed isn't going to raise interest rates until the Mayans said the world would end," by the way. What the fuck! We all know that.