The Fed is starting to print money. Overview for 14.10.2019

EURUSD is trying to rise early in the week; market players are keeping a wary eye on the Fed.

The major currency pair remains “in the black” and intends to continue its growth while investors are very cautious about the USD. The current quote for the instrument is 1.1033.

If one decides to explain in simple terms what is happening in the US monetary policy, saying that the US Federal Reserve is turning its money printing press on and starting to bankroll the market would suffice. However, if digging into the matter, it goes like this: last Friday, the Federal Reserve Bank of New York released papers, according to which the US regulator would start buying treasury bonds in the amount of 60 billion USD per month. The process is expected to last at least until the end of the second quarter 2020, this means that the QE, and that’s QE for sure no matter which way you look at it, will cost at least 510 billion USD. 

The Fed itself strongly disagrees on the term “QE” here, because it would mean that the regulator caved in to the White House and loosed its monetary policy for the long haul. The liquidity in the amount of 60 billion USD will be directly emitted to the market and might as well weaken the American currency. For the record – US President Donald Trump won’t like it a lot. 

Why doing this? At least, to help the American economy handle trade wars, which are now put on hold, but may revive any moment.   

The Fed said on several occasions that these money infusions are just technical, but the history shows otherwise. Of course, the USD doesn’t like these circumstances as well.