The euro and the dollar see-saw continues. Federal Reserve rate decision on Wednesday morning made no mention of expanding the scale of the view of quantitative easing, the dollar after a steady rise again; and Moody’s yesterday placed on negative watch the Spanish news exacerbated the decline in non-US currencies.

Expand the scale of the share debt dollar higher

Federal Reserve rate decision and policy statement after the announcement, the dollar index briefly dropping as fast, but then gradually rebound.

0 ~ 0.25% the Fed to maintain the benchmark interest rates and treasury bonds to buy 600 billion U.S. dollars the same size as widely expected decision, however, the results of the Federal Reserve meeting on interest rates before the announcement, as investors worried about the meeting may be announced the expansion of quantitative loose scale, the dollar index lower pressure and the lowest since record three weeks.

However, results of the meeting to consider, analysts believe that expansion of quantitative easing (QE3) the present situation and the possibility of a large, and may even reduce the original 6,000 billion in debt purchase program, which will boost the role of the dollar.

If the economists point out that next year the Fed reiterating the purchase of 600 billion U.S. dollars in the longer-term bonds, such wording is worth noting that, in the first round of the Fed during the implementation of the quantitative easing policy, and not repeat that at each meeting a resolution. This implies that the Fed “in the way of continuing the assessment on the purchase of assets very serious attitude on the issue.” Therefore, if the U.S. economy gradually recovered and exceeded expectations, dissatisfaction with the amount of the Federal Reserve is likely to perform QE2.

There are agencies that the QE2 has been a lot of criticism in the circumstances, the implementation of the quantitative easing policy of the third round of the “threshold” will be high; unless the continued weak U.S. employment data, or the Federal Reserve is unlikely to make QE3 choice.

In addition, the market also announced that the U.S. retail sales and producer price index increased investor confidence in long-term prospects for the dollar, higher dollar also helped.

U.S. data released Tuesday showed U.S. November producer price index (PPI) rose by 0.8% monthly rate, is expected to rise 0.6%; for this year’s biggest monthly gain since March, is also the fifth consecutive month of growth. Analysts said that as a forward-looking indicators of inflation, PPI strong hint the Fed’s policies are working to benefit the dollar higher. While the U.S. Commerce Department data showed U.S. retail sales in November rose by 0.8% monthly rate is expected to rise 0.6%, rising for the third consecutive month to achieve.

Spain, the euro extended losses worrying

Apart from the last Fed meeting on interest rates during the year, the week of this month the market is also concerned at the EU summit 16,17, but investors are able to reach any substantive progress in the meeting does not count on it.

Imminent EU meeting today, the euro and other non-US currencies lower yesterday, by the position of the Federal Reserve and Moody’s Aa1 rating of the Spanish cut into the watch list may also be considered aggravated the euro’s decline.

Rating agency Moody’s said the ratings will be placed on negative watch Spain was mainly due to fluctuations in the Spanish financial pressure. Moody’s says can not rule out the possibility of Spain for assistance, but compared to other euro-zone “problem countries”, the Spanish still has a relatively solid credit.

In Greece, Ireland, have been seeking help after the crisis of European sovereign debt market concerns are not reduced, the debt problem may be passed to Portugal and Spain, and Spain as the euro zone’s fourth largest economy, investors worried that it will run out of 750 billion rescue euro rescue fund, so investors expect the EU to introduce new measures to prevent the crisis continues to spread.

However, there are differences within the EU, Germany and France have not agreed to expand the scale and distribution of assistance funds for the common euro-zone bonds. Analysts believe that the differences between the euro increases uncertainty about the future, in an effective program to reach a consensus and come before the euro against the U.S. dollar will pressure may be lower.

German Chancellor Angela Merkel yesterday re-emphasized the need for coordination of all euro area member states competitive, but not the common issue of euro bonds. She said that European finance ministers reached agreement on the rescue mechanism will be December 16 to 17 by the EU summit, the private sector and the IMF will be involved in the rescue mechanisms for a permanent Euro.

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