Archived IMT (2010.10.01)

DUDLEY DEALS DOLLAR BLOW Bill Dudley, the head of the FRBNY may not be known as the most dovish FOMC member, but his remarks today were not only an explicit support for QE2 but also an answer to the more hawkish members (Richmond Feds Hoenig, Philly Feds Plosser & Minneapolis Feds Kocherlakota). Dudley countered the notion that balance sheet expansion destabilizes inflation expectations, and is the first FOMC member to give an idea on the quantity of asset purchases. He said $500 bln in additional purchases would be nearly equivalent to 50-75 bps in fed funds rate cut. USD INDEX drops to fresh 8-month low at 78.10, deepening losses furtehr below the 200-week MA of 80, which should now acts as resistance, coinciding w/ the NECKLINE. $EURUSD continues countdown to $1.3850. FOR MORE FREQUENT UPDATES & Analysis, the best way to follow me while Im on travel is via my twitter on http://twitter.com/alaidi