The Fed will once again expected to implement quantitative easing policy all the way down the dollar, the dollar index fell in just a half months of 8%. However, close to Fed policy meeting, the market is changing attitudes on the dollar. Intensity less than the expected capital injection fears, dollar down in one fell swoop suffice space.

Federal Reserve policy meeting next week may be published on the progressive plan to buy bonds, and the injection of the size of the bond market is less than previously expected. Affected by this, 27 dollars in Asian and European trading hours extended the previous session’s gains momentum and achieve Erlian Yang. Analysts believe the dollar bottoming signs apparent.

Easing into the focus of the scale

Economic recession and low inflation situation, the Federal Reserve or the next new round of monetary stimulus Zhou Kaiqi, announced in a meeting on interest rates in coming months worth billions of dollars to buy U.S. Treasury bonds program. Reported that, although those details have yet to be discussed internally, but the basic idea of the Fed has relaxed the second shape.

Injection scale in the market position of the lower end of forecast range, the current market expectations the Fed will generally focus on the initial commitments in 5 months at least 5000 billion U.S. dollars to buy bonds. The Fed plans to implement during the first round of quantitative easing by 1.7 trillion U.S. dollars to buy mortgage-backed securities and bonds.

26, once again strengthen the economic data released by the Federal Reserve will launch a new round of monetary policy stimulus to support economic recovery is expected. U.S. industry research firm – the world’s largest business federation, said the data released the same day, October consumer confidence index rose to 50.2. However, the Association of Economists Linfu Blanco said that although the data has increased, but the U.S. economic recovery over the past year the index is still at historic lows. In addition, according to Standard & Poor’s – Kaisixile report showed U.S. single-family home prices in August consecutive month, down, and hovered near recent lows.

These data show that the U.S. economic recovery remains fragile. However, there are still many economists and even some Fed policy makers on the second stimulus was questioned. There are three areas in which the Federal Reserve Bank had expressed doubts about the measure, they Fed policy-making departments, the Federal Open Market Committee (FOMC) holds voting seats.

Investors turn to the delicate state of mind

Although Fed Chairman Ben Bernanke had been released saying that the Fed may implement a new round of quantitative easing policy. However, quantitative easing measures on the secondary market, the attitude, but has recently played a subtle change. Fed to buy bonds around the scale and speed of the market that is still great uncertainty.

U.S. dollars in 27 Asian and European trading session up slightly, 18:50 GMT, the dollar index rose 0.17% to 77.75. The market as expected, the Fed will inject the financial system strong doubts. Some analysts also believe that the weak dollar in recent days have reflected these expectations, we can say once again the concept of quantitative easing has been overdrawn. Subtle changes in investor psychology will complement the dollar rising.

“In the November meeting and will not be one hundred percent the second round of quantitative easing.” Forex.com principal analyst that “this is one of the tools the Fed is running out, and do not that is not forced to use, there may even be delayed further implementation of the first quarter of next year, I think this week’s market trend reflects investors have begun to consider such a possibility had. ”

“The biggest problem is that once the Fed announced the policy, what would happen.” Strategists at BNP Paribas Sebastian Garay said, “If you bet on a large scale for a position, you will seek to hedge their exposure risks, because when all bet the same position, the high risks. ”

U.S. dollar will now reversed?

Despite the dollar’s exchange rate against the euro and the yen’s recent volatility is still within range of activities, but some traders believe that if the Fed meeting next week, announced easing to a more cautious than the market expected manner, which will benefit the dollar.

This year, the U.S. dollar against the euro exchange rate has dropped by more than 3%; U.S. dollar against the Japanese yen tumbled more than 12%. But this week the dollar index has been strong for two consecutive trading days. U.S. 26 turned up by the fall, the euro lost momentum when approaching $ 1.40; yen also from the 15-year highs.

“Everything depends on the gap between reality and expectations,” Harris Private Bank’s chief investment officer said, “If the Fed announced the relaxation of the scale than expected, for example, 800 billion U.S. dollars, which will help drive down the dollar; but if the decision of the Federal Reserve disappointed investors, the dollar could rebound. ”

However, Standard Bank’s currency strategist Stephen Baron said, even if the Fed announced that the quantitative easing measures smaller than expected, the dollar is unlikely to significantly bounce. He pointed out that the dollar, the important thing is not the scale of quantitative easing, but the U.S. interest rate compared to other regions (especially the euro area) the downward trend is continuing. He is also expected that the euro interest rate will continue to benefit this year against the dollar pushed the euro to rise from 1.45 to 1.47 U.S. dollars.

Rebound in the dollar impact of two consecutive trading days, 27 major Asia-Pacific stock markets generally fell. South Korea, Singapore and the Indian stock market decline in the 0.51 to 1.21% between the range.

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