Thursday, March 19, 2009

US $ falling with Fed's $300 Billion plan


Boy, I love these exciting times.

Yesterday, news reported that the Federal Reserve will spend $300 Billion in the next 6 months to buy Treasuries. Fed policymakers have committed to buy or lend against everything from corporate debt, mortgages and consumer loans to government bonds as they try to end the seizure in credit markets. Here comes the flood of greenbacks.

As a result, the US dollar was oversold and collapsed across the board yesterday and further today. USD/CAD has fallen around 530 pips from the 1.2727 to reach the 1.2186, fresh five weeks high. Oil and Gold have appreciated approximately 7% to $51.06 and $957.40 respectively.

We have all been expecting hyper-inflation as borrowing costs remains low. Government spending of this magnitude will undoubtedly accelerate inflation.

As we speak, the Dollar continues falling.

Tomorrow, when the Canadian Retail Sales Report comes out, I suspect the CAD $ will get another lift.

1 comment:

Anonymous said...

Ledge.