New York Session – March 18, 2009 5:09 PM

by Trader Rich

The USD was crushed following the Fed’s announcement that it will buy 0 bio of longer-dated US Treasury securities, an action known as quantitative easing that is loosely translated as ‘printing money.’ In addition, the Fed announced it would further expand its balance sheet by buying up to an additional 0 bio of agency mortgage backed securities, and another 0-200 bio of agency debt, bringing the total planned new expansion of the Fed’s balance sheet potentially to .25 trillion, a near doubling in size. The announcement caught markets off-guard as most expected the Fed to wait for the TALF program to begin and judge the results before undertaking fresh measures. The initial reaction was to hammer the USD on fears the move amounts to a devaluation of the currency–the printing money idea–as well as on concerns the Fed is desperate and running out of options to restore consumer credit. Full text »

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