Dollar gains focus

The value of the dollar is becoming a larger focus of the Federal Reserve. The recent rate cuts in early 2008 have had a significant role in escalating the dollars slide. The Fed has no direct ability to improve the dollars value against other foreign currencies, but they are accutely aware that the recent cuts have diminshed the value to an all time low agains the Euro.

The slide of the dollar has a number of key issues. The recent run up of oil prices is said to be linked to the value of the dollar declining, thus having a greater impact on oil and gas prices as these are global commodities. This past year has seen the conversion of one dollar to one euro fall to a record low of 62 cents per Euro, before recently climbing to 64 cents. This decrease is certain to have an impact on Americans traveling abroad as well as U.S. firms who have global operations.

The Fed will be closely watching the upcoming economic data including the job markets as welll as inflationary data to determine how soon they may actually begin raising interest rates. If the market sense some  slight improvements, it would not be unquestionable to believe the Fed could start raising the Fed Funds rate as soon as the early fall, even if the U.S. real estate market has not fully recovered.