The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less. This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative.The expansion of the long-term securities buying program and the prospect for the low interest rates over prolonged time suggests that the Fed has a very negative outlook for the US economy. The dollar, being a ”refuge” currency profited from the risk aversion that followed the FOMC statement. The Dollar Index gained 1 percent to 77.803 as of 17:00 in New York. EUR/USD fell from 1.3571 to 1.3552 as of 4:31 GMT today. GBP/USD dropped from 1.5498 to 1.5460, while USD/JPY rose from 76.44 to 76.75.
giovedì 22 settembre 2011
Dollar Jumps as Fed Expands Bond Purchases
The US dollar jumped after the Federal Reserve announced it’s going to increase purchases of longer-term securities. The resulting surge of demand for safer currencies was beneficial for the dollar. The Federal Open Market Committee left the federal funds rate at 0 to 0.25 percent range. The FOMC wrote in its statement: