Quick drive-by post; too busy to do much else.

[randomness]

The last Fed rate cut (and I do mean last, because there's nowhere left for them to go from here) really did for the dollar.

$1.46 to the € and ¥88.7 to the dollar this morning.

That's compared with a $1.34 euro and a ¥91.2 dollar on Monday, before Tuesday's cut.

Nice post in Alphaville on that this morning:

To speculate against a currency - like the dollar - you need to be able to borrow that currency freely and cheaply.

Now look at what the Fed is providing to the markets: unlimited amounts of dollars at close to zero cost.

Wheee!

Comments

[stolen-tea.livejournal.com]

Wow, so... Unlimited dllars at minimal cost => dollar falls against other currencies => the balance of trade moves in our favor.

I wonder if that was an intentional side effect? But that would presume that someone knew what they were doing.

[r-ness.livejournal.com]

I wonder if that was an intentional side effect?

I suspect it is.

I remain concerned about the unintended effects.

[r-ness.livejournal.com]

In fact, see http://en.wikipedia.org/wiki/Bernanke_Doctrine.

Depreciating the dollar is step 5.