Essay by PaperNerd ContributorUniversity, Master's November 2001

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The article entitled "Dollar Climbs Amid Focus on Central-Bank Steps" focuses on the action of our federal reserve and the actions of the European Central Bank. The article opens by stating that "the dollar rose sharply against the Euro as the contrasting policies of the Federal Reserve and the European Central Bank drew focus." The Federal Reserve is suspected to cut interest rates by .5% or .25% and the European Central Bank expectations are very suspect at the moment. The value of a dollar is showing that the investors and economists are confident that the Federal Reserve's aggressive actions will allow the U.S. consumer market to bounce back and increases the value of the dollar. Later in the article they say that economists believe that there will definitely be a rate cut, but they are not sure of the amount. They are debating between .5% and .25%. Adrian Schmitt, a foreign exchange strategist from London suggests that from previous rate cuts evidence has shown that smaller rate cuts have been proven to show larger results.

Ultimately many investors are taking a stab in the dark by trying to guess the amount at which the Fed will cut interest rates.

The article then switches topics to discuss the Euro. The ECB will decide this Thursday whether its key interest rate will stay at 3.75%. Many rumors floating around the market are not positive about the ECB's future actions. Earnest Welteke, president of the BundesBank said that a positive or negative movement from this key rate should not stunt economic growth, but as of Thursday these rumors are still just speculation and are not making predictions easy for economists. The article is brought to a close by offering economic data for the European markets in attempt to clean up any rumors.