Dollar back in form as payrolls hangover lifts

http://www.reuters.com/article/2014/01/15/us-markets-forex-idUSBRE9BJ0EF20140115

According to this article, recently released reports are showing that the value of the dollar in the global currency market is climbing. Just as the value of the dollar is increasing, the values of both the Euro and the Australian dollar have both fallen recently as well. As I stated in my previous blog, the value of our currency as well as other currencies has a direct effect on the price of foreign imports. Since the United States purchases a huge amount of imported goods from China and other asian countries, the value of the dollar has a great effect on the prices of those goods.

After seeing this increase in the value of the dollar, Chicago Federal Reserve President Charles Evans has stated that the Fed is considering winding down some its bond-buying programs which are used to inflate the value of the dollar if the economy strengthens. In my opinion, it's a reassuring sign to see the dollar gaining value against other currencies. Hopefully this progress will continue throughout the year as the economy continues to recover.

While the Federal Reserve can promote short-term economic growth through inflation, it is best for long-term economic growth to be achieved naturally, and a stronger U.S. dollar will result in lower priced foreign goods, which will hopefully result in greater consumer spending. As we've all learned, greater consumer spending leads to higher incomes, and this is a legitimate way to spark economic growth.