Archive for September, 2006
Dollar Impressive Rally Over
By Marek W. Stupka | September 20, 2006
Over the course of previous weeks we have seen quite impressive journey altogether positive for US dollar. However, the journey seems to be fully over now…
Two days ago current account balance for the second quarter beat the worst expectations as the deficit increased to the second highest deficit on record, a whopping $218.4 billion shortfall. What is even worse, Net Foreign Securities Purchases, which (translated to English) is just another term for inflow of capital which the US Government uses to cover the its deficit, came in in $32.9 billion instead of $70 billion. In other words, US economy continues to run on a gigantic, ever-increasing debt, however, its lenders are beginnning to be truly alarmed.
Just minutes ago the whole FOREX world has watched the FED (Federal Reserve, Central Bank of the USA) making its decision to leave the base interest rate unchanged. It has been the second time FED didn’t hike rates, following the remarkably long string of continuous rate hikes since 2005. In FOREX, interest rate tightening translates to being positive for the economy, since it stimulates investments and, consequently, consumer demand which is percieved as key element of growth.
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