USD to weaken with Fed Increasing Interest Rate

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Currently the fear of interest rate going up is indicated in the market. When Fed minutes are released after FOMC (Federal Open Market Committee) meeting once in every 6 weeks, the interest rates will become very sensitive on the day. Since the Fed Funds Rate is near 0 to 0.25, for the last over 5 years that is from Dec 16, 2008. There is no doubt that it would have caused credit bubble. However this credit bubble is helping a lot to rise the home prices.

The US stock market takes the bad news is good for stocks since Fed will not increase the interest rate anytime soon. But unfortunately the contrary is true. Fed continues its tapering by reducing its bond purchases of 25 billion US$ per month after the FOMC meeting on Jul 30, 2014. With the current phase, Fed will stop the bond purchases completely in 18 weeks, that is by end of this year.

Fed can rise the interest rate as soon as March 2014. So when it reaches a point very close to rise the interest rate, USD will start going down across all major currencies since USD is already peaked.

We will have enough time that is for another couple of months to take advantage of strong USD.