Fed On Board with Orderly Decline of the U.S. Dollar

It's open season on the U.S. dollar today in forex trading as gold gets ready for another surge, and as stocks get ready for a higher open. Additionally, the fact that the Federal Reserve sees the dollar's decline as orderly and acceptable, it is an indication that dollar strength is not going to be very heavily defended.

However, the Fed isn't all rosy on the dollar's weakness. The body is aware of the risks associated with a declining greenback in currency trading, as Kathy Lien reports in FX360:

According to the minutes of the November 4th monetary policy meeting, Fed officials have grown increasingly aware of the risks associated with low interest rates and a weak dollar. Some of the FOMC members noted the possibility of negative side effects that might result from very low interest rates such as excessive risk taking in financial markets or an unanchoring of inflation expectations. Although the likelihood of this happening is “relatively low,” they are telling the markets that they will keep an eye on these risks.

The real news that is helping the risk trade today, though, is the fact that the Federal Reserve has revised its economic forecast to paint a happier picture of what's ahead: