Always remember that in general a decision to raise interest
rates will be U.S. dollar-friendly and a decision to lower rates
will be U.S. dollar-bearish.
Figure 2-4 shows an initially bearish reaction for the dollar
as the USDJPY was sold off when the FOMC announced that
it would leave interest rates unchanged rather than raise them
in the face of rising commodity inflation, as some economists
were recommending. In this case the initial knee-jerk reaction
lower was short-lived as USDJPY continued on its previous
path higher.
The Why of Price Valuation
37