US Dollar Index gains on Fed statement & the money printing continues

The ICE US Dollar Index has shot higher following this afternoon’s statement by the US Federal Reserve however the money printing merry-go-round will remain in place as the Fed continues its current pace of bond purchases, designed to bring down US interest rates.

Latest Dollar Index Rate

The ICE US Dollar Index, which tracks the US dollar against a basket of six world currencies was up at 81.485 from 80.835, 19:59 GMT on the ICE Futures Exchange.

“The dollar is stronger, and generally that would be consistent with expectations of tapering,” said Eric Viloria, senior currency strategist for Gain Capital Group LLC in New York, in a phone interview.

US Fed’s Statement

The US Fed’s statement and conference have been awaited with unusual anticipation by traders and investors looking for clues about when the Fed might curtail its stimulus programs. Markets were expecting more indication of when the US central bank might begin to taper its asset purchase programs. Expectations the Fed could begin that process sooner than previously expected had weighed on the US dollar in recent weeks.

Federal Reserve chairman Ben Bernanke has said that the US central bank could start slowing its asset-purchase scheme later this year with a view to ending the programme by mid-2014.

“While the Fed made no mention of tapering its asset purchases, it reiterated that it is prepared to increase or decrease its asset purchases as the upcoming data dictates,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in a note after the statement. “Some market players had expected the Fed to sound a slightly more dovish tone, especially given recent downside surprises to inflation.”

However the Fed has again eased its growth forecast for the US economy this year. So is this statement good news or not? At the end of the day the US Fed can say whatever they think the markets want to hear together with massaging the figures, but the reality is that the money printing goes on.

“Federal Reserve could start ‘tapering’ QE later this year” – Well that statement is technically true but if everything is so great all of a sudden after four years of expert Fed treatment then why is the American economy still on life support with an IV drip of $85 Billion of QE every month?

Four years of doing the same thing has had no appreciable effect on the real economy but the Fed expect that in a few months everything will suddenly come up roses? In he end it will be ‘More QE’ the US dollar will crash, ‘Less QE’ the US Bond market will crash. Simple…

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US Dollar Index gains on Fed statement & the money printing continues