Weak Federal Reserve Resolution To Suppress Strong Dollar?

The Asian session rose first and then fell. After a sharp fall overnight, the Bulls still showed signs of weakness.

The US dollar index fell back from its 11 year high on Tuesday, because of weak U.S. spending data and disappointing corporate earnings, raising doubts about the optimism of the US economy.

At present, the market is cautiously waiting for tonight's fed resolution.

Many investors are starting to focus on the near future.

The gains were made as a result of the rally. As the FED issued a policy statement late Wednesday, the market believed that the statement might indicate that the position of the Fed would be more moderate due to the recent oil price collapse.

Bart Wakabayashi, head of foreign exchange at Dao Fu bank, said, "I think the dollar sale we have seen so far is just the adjustment of the position before the Fed's policy decision."

He continued, "but I am a bit nervous. As a whole, the dollar is still at a very high level. If the Federal Reserve puts forward a negative view of the US economy, the dollar may go further down."

The US dollar index fell to 94.10 on Tuesday, the biggest daily decline since early October, breaking 95.48 from Friday's 11 year high.

The latest US dollar index is at 94.10.

After the loosening of monetary policy in Singapore, the US dollar gained a boost from the slope dollar and other Asian currencies.

Since the Fed's December resolution, the US dollar has strengthened again, rising to 11 and a half high at the beginning of this week.

Many industry insiders have already worried that a strong dollar may pose a threat to the Fed's rate hike, and whether the Fed will mention this issue will also become the focus of the market.

To study

Jon Hilsenrath, the widely accepted federal reserve news agency, said last weekend that the ultra trillion QE plan announced by the European Central Bank last week will be a major test for the US economy and the Federal Reserve.

The ECB's QE plan will have three effects on the Fed, which may delay Yellen's interest rate hike, even though other FOMC officials have been trying to weaken the impact of the strong US dollar so far.

Jon Hilsenrath indicates that

The QE plan will result in a significant depreciation of the euro, and the rapid appreciation of the US dollar will mean higher pressure on US exports.

The strong dollar will also trigger a slowdown in US economic growth and inflation. The Fed may therefore hesitate in raising interest rates.

So far, American officials have chosen to downplay the so-called currency wars, or even refuse to discuss this topic.

Over the past 1 years, the US dollar has appreciated 15% against major trading partner countries.

The recovery of the US economy is strong, the global economy is weak and the Fed's interest rate rise has contributed to the return of the US dollar.

Jon Hilsenrath said the strong dollar would bring about three results.

First, inflation will be depressed, and 2% of the Fed's target inflation may be difficult to accomplish. Secondly, a stronger US dollar will hurt exports and economic growth. In addition, the pursuit of US dollar assets is likely to cause asset bubbles, which is also a concern of the Fed.

Market interpretation: Despite the December resolution, the Fed did not have any statement about the strong dollar, but this did not prevent it from joining this hot topic in this resolution.

If the Fed starts to show concern about the strong dollar, it may be bad for the US dollar, good currency and gold price.

If the Fed remains indifferent to that, the dollar is clearly worth celebrating.