Dollar Sharply Lower, Causing a Rush into Commodities and Equities

Posted Oct 14th 2010 10:30AM by Connie Madon
Filed under: Before the Bell, Major Movement, International Markets, Market Matters, Commodities, Oil, Federal Reserve, Currency

The big story today is the U.S. dollar. The December dollar futures are trading at 76.69, down 0.597 (as of 7:30 EDT). That was the trigger and it is off to the races with Asia-Pacific shares hitting their highest level since July 2008, according to the Financial Times. Stocks also opened higher in Europe with the FTSE All World Index up 0.8% to 210.4.

Now you are wondering, what is happening? The answer is the Federal Reserve. The Fed minutes stated that the central bank was ready for another round of quantitative easing to stimulate the economy. That means more inflation and a scramble to buy risk orientated commodities and securities.

The dollar drop caused a knee-jerk reaction in the euro. The December euro contract is trading at 1.40740, up 0.0118. Gold, which set new highs yesterday, is again moving higher with the December contract up $7.10 to $1,377.60 per ounce. Oil is also higher with the October contract trading at 83.48 per barrel, up 0.47.

The Fed wants higher inflation, and by golly, it is getting it in spades! The problem is now the horse is out of the barn and it may not be able to get it back in.

Tags: currency, dollar, euro, featured, federal reserve, gold, inthenews, oil

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Reader Comments (Page 1 of 1)

10-15-2010 @ 8:12AM

Drew said...

So is it time to take on large amounts of dept at super low interest rates, so that I may pay the dept off with cheap dollars?

As soon as they start causing high inflation they will have to hike the interest rates back up... Will this happen soon?