This is not about to love cheaper oil, gasoline, imported from BMW or summer trip to Rome?
While the answer to most people is something along the lines of “more, more, more,” the reaction of the Fed’s dollar surge to a high of 4 months is likely to be a source of much concern greater.
“At the end of the day, a stronger dollar does have consequences,” said Peter Kenny, managing director of Knight Capital in the video attached, referring to the advantages and disadvantages as “the perfect Catch-22. “
Like him, and surely the FOMC sees three weeks, the dollar hurts exports increase, manufacturing and jobs, and that, he says, is where the Fed will be forced to intervene and take action , “to avoid falling back into recession.”
Of course, you will never hear that the Fed or the Treasury or any comparable governmental entity specifically saying they support the weakening dollar, but you’d better be prepared to hear all sorts of things that suggest the price of this strong dollar hurts U.S. growth.
As Kenny says, “a stronger dollar has that competitive edge away (in the industrial production and manufacturing) and would have a very direct and negative impact on GDP growth.”
As much as it increases the likelihood of a further easing if the uptrend continues, Kenny does not see a preemptive strike before the Fed goes next meeting scheduled for 19 and 20 June At the same time, if the crisis in Europe continues to worsen, an effort like that multi-bank implemented by six central banks in November, might happen to be disclosed at any time.