Fed starts daily operations
The Fed says starting Monday it will now hold daily swap line operations with four other central banks:
- BOE
- BOC
- BOJ
- SNB
On Monday they announced weekly programs and an 84-day program. Now they're going to do daily operations and that will continue at least through April. The 84-day programs will also be done weekly now.
I think we came close to coordinated operations to weaken the US dollar this week. For now, central banks are going to try to use swap lines and hope that takes the pressure off the dollar.
However I fear that dollar demand is self-fulfilling because it's been the only thing that has been working.
In any case, watch how the dollar reacts to this. The operations have had some success this week. I think the aim is simple to slow the dollar gain and keep it orderly. That would be something of a win for broader risk assets because the volatility in FX right now is damaging to market confidence.
