The Reserve Bank of Australia unexpectedly raised rates by 25 basis points to cool down its economy. It will “gradually reduce stimulus” in anticipation of sustained recovery. Australia has probably been the major economy least affected by the global economic slowdown, so one would expect the RBA to be the first major central bank to [...]

Marshall Auerback pointed out a statement from Dallas Fed Chief Richard Fisher today that is not getting a lot of attention despite its importance.  He said:
I expect that when it comes time to tighten monetary policy, my colleagues and I will move with an alacrity that, if needed, will be equal in speed and intensity [...]

One other reason to sell the dollar is interest rates.  Why not borrow in dollars where interest rates are low and invest elsewhere where yields are high?  This is what is known as the carry trade.
In the past decade, the Japanese yen and the Swiss franc were favorites for the carry trade because of their [...]

Yesterday I mentioned the announcement by the FDIC to end its debt guarantee program and opined that this was the first sign of tightening/liquidity withdrawal by the U.S. government.  Today the evidence is mounting that this is indeed an orchestrated move toward policy normalization.
The FT spoke to treasury officials who confirmed this interpretation:
A senior Treasury [...]

Earlier today I posted an article about how accounting was favourable to banks in that it could help them weather the storm and appear well-capitalized until a recovery is underway.  Afterwards, a buoyant economy would increase earnings enough to allow the massive writedowns that need to flow through the income statement to be taken in [...]

This analysis comes via Brown Brothers Harriman (I have bolded a few lines):
Mexico’s central bank is widely expected to cut its overnight rate by 25 bp today. That would bring it to 7.25%. Last month it delivered a 25 bp rate cut too. The market had expected a 50 bp cut and [...]

Thirty years ago, it was “Anarchy in the U.K.” as Britain tried to get away from its role as the sick man of Europe. That meant civil unrest, high inflation and a weak economy. Margaret Thatcher was seen by many as the solution. Today, the British economy is sick again and there is anotherready solution to hand: quantitative easing a.k.a printing money:

The European Central Bank cut its benchmark rate 50 basis points (0.50%) to 2% because of weakness in the Eurozone. While a cut was widely anticipated, it was not known whether the ECB would cut 25 or 50 basis points. However, the cut of 50 basis points ended up confirming the prevailing view that the ECB is behind the curve. As a result, the Euro weakened against the Japanese Yen and the U.S. Dollar.

Is this an unorderly decline for the dollar?

These last two days have been bad for the dollar. We are seeing heavy losses against the Swiss Franc, the Euro, the Australian Dollar, and The Japanese Yen.

The U.S. Dollar got more bad news today when the Bank of England (BoE) decided to not follow the U.S. Federal Reserve’s lead to a Zero Interest Rate Policy (ZIRP). The BoE was seen as the most likely to follow in the Fed’s footsteps as i suffers from the same debilitating economic problems a popped housing bubble and record writedowns followed by job losses, a lack of consumption, and economic stagnation. Most importantly, U.K. banks simply are not lending. But that does not mean they want to follow the U.S. to zero.