US Dollar Index Clobbered on Leaked ECB Plan

The U.S. dollar and U.S. Dollar Index are getting hit hard today after the "leak" of the plan by the ECB to acquire an unlimited number of bond which mature in 0-3 years.

Ignorant reporters continue to imply there is uncertainty because Germany opposes the plan, but over and over again that has been the positioning of Chancellor Angela Merkel, who attempts to make it look like she's fighting it till the bitter end before caving at the last moment. There is no doubt this plan will go forward officially on Thursday.

This will probably appear to stabilize Europe over the short- to mid-term, but that's not even a guarantee in the contracting economy of the euro zone. It would be more accurate to say that is what will happen in the minds of the people of the world, even though absolutely nothing is being done to address the underlying issues, which is primarily the reduction of government spending and changing of financially parasitic lifestyles of the people living in socialist Europe.

Until that is done, nothing will be changed which will have a beneficially long term effect.

As for the U.S. dollar, it was trading down against the euro, with the euro climbing to 1.2603 against the greenback, a gain of 0.0036 as of 12:16 EST. The U.S. Dollar Index was down to 81.21.

US Dollar Gains against Euro and Pound after Rate Cuts

In response to the weakening European economy, central banks started slashing benchmark lending rates in attempts to jumpstart credit markets again.

While the move of cutting rates by the European Central Bank was in line with expectations of 50 basis points, bringing it to 3.25 percent, the cuts by the Bank of England shocked a lot of investors and analysts, as they cut rates by 150 basis points to 3 percent.

The U.S. dollar responded by strengthening against the two currencies, as at close to 5:00 EST it had gained by .0147 against the euro, and .0126 against the pound.