The U.S. dollar is taking a harsh but needed beating on Tuesday, following the U.S. Federal Reserve pulling out all stops, by pumping the market with many dollars.
On Monday, the FOMC announced unlimited quantitative easing and programmes to support credit markets, in a massive bid to cushion the huge incoming blow to the economic picture in the country.
The dollar index was forced to slip further away from Friday’s peak of 102.99, its highest level since January 2017.
In terms of the programmes from the central bank, these include; purchases of corporate bonds, guarantees for direct loans to companies and a plan to get credit to small and medium-sized businesses.
The radical steps came after U.S. money markets crunched, with a broad set of market participants, from big multinational carmakers to small businesses, hoarding dollars fearing a drop in cash flow during lockdowns in their countries.
While the Fed’s move is likely to mitigate the blow, many companies will still be waiting for Washington’s fiscal stimulus package, which remained stalled in the Senate. After four straight days of marathon negotiations, the Trump administration and senators have failed again to secure an agreement on a roughly $2 trillion plan to provide a needed injection into the economy and give aid to hard-hit workers and industries.
During these uncertain times, we should take some positives and use this time wisely; let's continue to self-educate and be constructive. There are opportunities every day to extract money from the markets.
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