Dollar Headed for Sixth Week of Gains

Americans are waking up to more good economic news today, with the dollar getting a boost thanks to the Fed's discount rate hike.

Yesterday, the Federal Reserve unexpectedly increased the cost for commercial banks looking to take out loans from the Federal Reserve from 0.50 percent to 0.75 percent making it less appealing for banks to take out large sums of money for speculation.

The move was an effort to further stabilize the US (and world) economy by discouraging risk. (You'll remember that it was risk that got us into this economic mess to begin with.) The move also signals a shift away from the drastic measures and monetary looseness that followed the economic crisis of the fall of '08.

"These changes are intended as a further normalization of the Federal Reserve’s lending facilities," the board said in a statement yesterday, according to Bloomberg News. "The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy."

On the news, the dollar rose against 14 of the 16 most-traded currencies, according to Bloomberg. When our dollar goes up, much like a stock, it means it's become more valuable, and its value is directly tied to the stability (or instability) of our economy.

This year, we've seen a bunch of good economic signs ranging from an increase in housing starts (construction of new homes,) a bump in retail sales and a dip in unemployment below double digits.

The dollar is headed for a sixth week of gains against the Euro, trading at $1.3508 per euro at 10:12 a.m. in N.Y., up from $1.3527 yesterday.

Photo courtesy of iChaz via Flickr.