Fed’s Fisher surprised by decline in trade flows

Dallas Fed president Fisher is on the wires saying he is surprised at the decline in trade flows even given the recession. He says that the drying up of trade finance may have had more to do with the decline than the lack of demand.

Protectionism is the biggest risk as in tough times, political instincts tend toward protectionism.He cites the recent US tariff on Chinese tires as “poorly judged political quick fix”.

On the dollar, Fisher says no policy-maker will call for a weak dollar but that a lot of the buck’s weakness is due with trade adjustment. The long-term value of the dollar depends on US policy-makers “getting it right”, Reuters reports. As far as he is concerned, the dollar is not a policy instrument (therefore should not be a focus for the Fed, one can surmise…)

EUR/USD is finding a buyer at the 1.4870 level at the moment but is unable to retake 1.4900.