Today is Sun, October 22, 2017 4:52:18 GMT
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Currencies EUR USD News Global Intervention Tanks US Dollar!

This morning’s historic news that Central banks around the globe have agreed to a 50bp rdecution in swap lines to help prevent a global liquidity crisis has sent the US dollar lower and all others higher as a result.  This chart shows the move vs. Euro (EUR/USD), which is a flawed currency and the cause of this action.

Nevertheless this move essentially puts more money in the global banking system and is similar to printing money, though it is a different way to accomplish the same task.  It should be noted however, that this does not “fix” the Euro debt crisis and those solvency issues need to be resolved once and for all.  Today’s action merely provides those facing the worst of the crisis (PIIGS counties, Euro and some US banks) with more time to get it together.

This action is also likely to create higher inflation with more Dollars chasing the same amount of goods.  So today really is just a question of supply and demand.  The end result remains to be seen and whether this has an effect on lowering bond yields in Europe, though my guess is it won’t. 

So volatility reigns supreme today and is a reminder to expect the unexpected!