James McKee

Federal Reserve Hesitant To Declare Victory



Posted: Monday, January 24, 2011

by James McKee
http://www.forex.tradingcharts.com

The Federal Reserve Bank of the United States is holding off any celebration even in light of recently growing numbers with regard to employment and a rising value in the US dollar.  Much of the rise in the US stock market and hence the rise in the US dollar has been rooted in the Federal Reserve’s recent 600 billion dollar quantitative easing program.  A program which has restored a measure of confidence in the US dollar and enabled the United States to continue doing business as usual, for the time being.  The simple fact of the matter is that quantitative easing also causes a good deal of inflation since creating money devalues all other money of that currency type.

China knows this and as a result has stressed its displeasure with quantitative easing as a result of holding so much US currency in its coffers that loses value when more currency is created.  This reality combined with an ever-growing need for foreign aid by the US is causing China to become weary of opening their wallets for much longer.  The Federal Reserve is aware of China’s increasing displeasure and as a result is very uneasy about taking part in any further QE practices.

Those on the forex currency exchange need to stay up to date on any moves by the Federal Reserve Bank to begin a new QE program as it would no doubt stress relations with China.  Such an event would surely be catastrophic with regard to the United States economy.
Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.
This Article has been viewed 110 times. (Not updated in real-time.)
No comments yet.
We want your comments! If you can read this, you don't have javascript enabled, so you can't use this comment system. Please enable javascript.