Reacting to economic underperformance, the dollar continued to edge lower earlier this week following its worst-performing stretch in almost a year. It dipped further on Wednesday as the Federal Reserve indicated it will continue to raise interest rates in the near future. Concerns about weak first-quarter indicators, including inflation, will not alter the rising interest rate strategy. As the dollar fell 0.3%, the Dow Jones Industrial Average rose 74.51 points, or 0.4% while the S&P 500 increased 0.2% and the Nasdaq gained 0.4%.
Normally, higher interest rates themselves and the expectation thereof propel the dollar higher and market indicators lower. The market’s reaction to the Fed seems to indicate that the U.S. economy is weak but not terribly weak and that the Fed is cautiously optimistic about near-term economic activity.
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AuthorFrank Longo, MBA, CPA is Assistant Professor of Business at Centenary University's School of Professional Studies. He teaches Accounting and Finance at both the graduate and undergraduate levels. ArchivesCategories |