Yesterday, Fed announcement is still containing the current market sentiment pushing the greenback lower across the broad. The fed has announced yesterday that it is provide greater support to mortgage lending purchasing up to an additional $750 billion of agency mortgage-backed securities to bring the total of its purchases of them to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a totally to $200 b and to improve conditions in private credit markets, the Committee decided too to purchase up to $300 billion of longer-term Treasury securities in the next six months.

The greenback came under strong pressure after this announcement which came accompanied with dovish growth outlook expected by the fed and underestimation of the inflation upside risks outlook because of the credit crisis and the recession pressure which is expected to continue longer than expected.

The fed action was expected to be taken later this year not immediately as what has happened yesterday in the face of the growth downside risks which are looking emerging further.

The market has finally read the quantitive easing policy pressure on the greenback and how it can dampen its value as we have recently mentioned the gold could get above 930$ directly after the data and it is now trying for breaking 960$ As the quantitive easing policy can increase the budget deficit and threat the creditability and the trust in the US treasuries increasing the pressure on the greenback across the broad especially versus the single currency as the Europeans are looking conservative in adopting such policies comparing with US and the gold which can get benefits from the new supplied ample of funds. The Fed's rate decision to keep the interest rate unchanged at .25% injecting more funds in forms of buying bad mortgages loans which caused the problem and long term US treasury for providing funds to the governmental stimulating plans in another step of its quantitive easing policy to spur investment for finding a closer recovery point as what has been read from Bernenke's testimony recently that the will of change is very important to get out from this crisis and he is looking working for this with no delay.

Best wishes

FX Consultant

Walid Salah El Din

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