Thanks to Bernanke's rate cut, Wall Street loves him but outside of that bonus rich area, the news is not very positive unless somehow the US stops buying goods from overseas. Oil prices seem to be OK so far but a currency problem could move the prices up again. Only days ago the dollar to euro rate was down around 1.25 and suddenly it jumped back to 1.45.
The dollar tumbled on Wednesday, hitting its lowest in more than 13 years versus the yen and also falling against the euro, one day after the Federal Reserve's historic rate cut.All of this so Wall Street can get a helping hand which of course, doesn't trickle down to Main Street. Brilliant.
As you likely know, the Fed on Tuesday cut its federal funds rate target to a record low, setting a range of zero to 0.25 percent compared with the previous level of 1.0 percent, and said it would use "all available tools" to battle recession.
The massive cut further diminished the greenback's yield appeal against the euro, which has registered a staggering 11 percent gain so far during the month.
"The underlying story in the FX market remains yield. The fact that the Fed made this major policy move yesterday really changed the balance of power towards the euro for the time being," says Boris Schlossberg, director of currency research at GFT Forex.
