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Ambrose Evans-Pritchard: Dollar tumbles as Fed rescues China in the nick of time
By Ambrose Evans-Pritchard
The Telegraph, London
Thursday, February 4, 2016
The US dollar has suffered one of the sharpest drops in 20 years as the Federal Reserve signals a retreat from monetary tightening, igniting a powerful rally for commodities and easing a ferocious squeeze on dollar debtors in China and emerging markets.
The closely-watched dollar index (DXY) has fallen 3 percent this week to 96.44 and given up all its gains since late October. This has instant effects on the world's inter-connected financial system, today more geared to the US exchange rate and Fed policy than at any time in modern history.
David Bloom from HSBC said the blistering dollar rally of the past three years is largely over and may go into reverse as weak economic figures in the US force the Fed to pare back four rate rises loosely planned for this year.
A more dovish Fed and a weaker dollar is a bittersweet turn for the Bank of Japan and the European Central Bank as they try to push down their currencies to stave off deflation. Their task has become even harder. ...
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