Dollar Plunges For Second Day On Doubts Over 2016 Fed Rate Hikes

[Purveyor]

The U.S. dollar extended its plunge against major currencies on Thursday as traders sharply unwound bullish bets against the greenback on continued scepticism that the Federal Reserve would be able to hike interest rates this year.

The euro rose more than 1 percent to its highest in 15 weeks at $1.12390 against the dollar EUR=EBS, while the dollar fell more than 1 percent to a two-week low against the yen of 116.525 yen JPY=EBS.

--CLIP
"The market came into 2016 with a strong preference for the dollar against virtually all other currencies," said Shahab Jalinoos, global head of FX strategy at Credit Suisse in New York. "That idea has been really challenged."

Many market participants entered the year with expectations that divergence in monetary policy between a tightening Fed and stimulative European Central Bank and Bank of Japan would lead the dollar higher. In December, Fed policymakers had projected four rate hikes this year.

Analysts have said dovish comments from New York Fed President William Dudley to MNI on Wednesday and recent weak U.S. economic data have reduced the likelihood of a steady pace of Fed rate increases. The dollar index posted its biggest one-day fall in two months on Wednesday.

MORE....

http://www.reuters.com/article/global-forex-idUSL2N15J2MN

[ErisDiscordia]

1. The Fed would have to be suicidal to raise again

(that is of course no guaranty that they aren't)

[SoCalMusicLover]

2. Fed Raising Rate Was Best Thing To Happen To My Gold Investments In Years

We're truly living in Bizarro World right now. Normally an interest rate hike would be horrible for Gold. That's the way it's supposed to work based on basic economic principals.

The Fed HAD to raise rates. They began to look comical everytime they met and released a statement saying they intend to raise rates, even telegraphing the # of increased they had planned for 2016. They could not leave 2015 without getting in that slight increase, even though economic conditions showed otherwise.

Now, they are in the position they wanted to be, able to utilize one of their "tools" by lowering rates. Only they won't do that, NO WAY! They would look like mistaken fools if they took the increase back so quickly. They have to ride it out, and hope that the situation turns around (it won't). They will wait for a couple of good reports in a row, and then probably decide to hike again, saying we've turned the corner.

[ErisDiscordia]

3. As Max Keiser likes to say, You can't taper a Ponzi Scheme

Estimates of the paper losses from the .25% increase were that it did the liquidity destruction work of 4 increases. So technically, there's no need for another...

It's a mess, to be sure. If we had a functioning Congress, and a Treasury Dept with brains...

[SoCalMusicLover]

4. That's Kind Of A Tall Order,

Functioning government and leaders with brains? Aren't you asking a bit much of our elected, or should I say Selected, officials?

[ErisDiscordia]

5. Bernie and his coat tails--our only hope.

A Hail Mary to be sure.

[SoCalMusicLover]

6. Go Bernie Go

Hillary has money falling out of her ass. Bernie, however, seems to be far less wealthy than Hillary, and thus is probably more economically responsible, IMO.

Hillary probably has Banks & Investment companies on her speed dial. Bernie, not so much.