Dollar recovers as Fed disappoints
Rising energy prices are savagely reducing the quality of life for some of the poorest members of our society, the UNISON union has warned.
"The US Dollar has recovered from four-week lows against the Euro and the Pound after the Federal Reserve announced they would extend their Operation Twist programme, but stopped short of adding to its record stimulus. Investors appeared to be disappointed the Fed didn't vote for more aggressive action and the US Dollar duly strengthened.
"In the press conference the chairman Ben Bernanke stated the Fed was ready to act further to stimulate the economy and boost job creation if the data continued to slow.
"While the US economy has been growing despite the recessions in many European countries, recent data from the world's largest economy has been less than encouraging. With just 69,000 new jobs added last month and consumer sentiment slowing there are signals that the economy may need some additional stimulus but with interest rates already at record lows there are question marks over how much more central banks can do.
"In the UK the Bank of England announced credit easing measures last week to provide cheaper financing direct to banks, bypassing the capital markets where interbank lending rates have been pushed up by the ongoing crisis in Europe. In addition, the bank seems ready to add to its quantitative easing programme as soon as next month after minutes released [yesterday] revealed four of the nine members voted in favour of it, with the Governor Mervyn King this time being in the minority.
"With several central banks now looking to ease monetary policy in one form or another many currencies could find themselves range bound in the months ahead. Of just a few central banks that are keeping policy unchanged or possibly tightening in the future is the Reserve Bank of New Zealand. This has contributed to the NZ Dollar strengthening by over 6% this month against the US Dollar, helped by GDP growing by 1.1% in the first quarter."
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