Rich, that was a great analysis of the meaning and consequences of the Fed’s rate reduction. Thank you. You sound a little ticked at the readiness of the Fed to throw itself behind boosting markets, spending, and borrowing and lending, over boosting the dollar and saving.
I am puzzled by what happened in the currency markets today: The dollar appreciated against the yen, but depreciated against the euro and british pound. Any ideas, Piggingtons? I know that reducing US interest rates makes the higher-yielding euro and pound relatively more atractive vs the dollar, but why would they become more attractive against the yen? Surely the carry trade from yen into euro/pounds looks more risky now, with a greater chance of declining rates in Europe to keep up some with the Fed cuts.
