11 Jul 2013
Session Recap: USD collapses as the Bernanke shows his more dovish side
FXstreet.com (San Francisco) - The Greenback trader lower on Wednesday as market was waiting the whole day for any QE clue in the FOMC minutes but finally the Fed decided to show its more pessimistic side just in the Ben Bernanke speech after the release.
Several, half of, most of, few members are the words the fed used in its minutes and then, the market assumed it as September, before year-end or even the next year as options in the QE tapering. The USD declines further.
After that, The Federal Reserve's chairman Ben Bernanke stated in the Q&A after his speech on the Fed's century that "inflation and jobs are signaling more stimulus needed." Overall Bernanke's comments were very dovish as he is concerned about "highly-levered risk taking" positions. He stated that "if we had not mentioned taper, we might have seen more risk taking, more divergence between market expectations and ours."
Bernanke linked the QE and interest rates to the 6.5% unemployment target. But it will be "some time after" this number to see the first rate hike. However, according to the Chairman, the "housing sector has been positive for economy," but "low inflation is not good for economy."
Then The USD collapsed. Overall, the EUR/USD advanced to test the 1.2980 level after supporting the 1.2750 area. The GBP/USD attempted to recover ground and after trading mostly sideways in the whole session, the pair jumped to the 1.5000 area after Bernanke.
The USD/JPY declined to sub 100.00 levels and reach fresh 1-week lows at 99.40. As Valeria Bednarik wrote in a recent report, "the bullish momentum seen in yen crosses until May this year is becoming just a good memory as time goes by: yen weakness is no longer a given fact, and market players have already priced in all the facilities the BOJ can provide."
The USD/CAD collapsed to 1.0450 after the FOMC minutes but the cross returned fast to its previous levels around 1.0510. With Bernanke the pair has falling again and currently it is testing sub 1.0450 levels again. On the other hand, the AUD/USD performed its first negative day of the week on Wednesday; however the pair is currently rallying to test the 0.9200 area. The Gold advanced, despite minimal, on the day to $1,251/oz.
Meanwhile, the European drama remains more than alive. Portugal politicians rejected the idea to convoke for early elections on political stability and possibilities for a new bailout package. In Luxembourg, the sempiternal Jean Claude Juncker was forced to call early elections as he lost the support of his main partner in the government coalition. Luxembourg is inside a secret service scandal.
Furthermore, the Spanish government is working in the middle of a huge corruption plot. However, it seems they don't know what resign means. Sovereign bonds are rising...
Main headlines in the American session:
US: Wholesale Inventories fall further in May, against forecasts
ECB’s Asmussen says completion of banking union ‘most pressing need’
FOMC Minutes: About half of members see QE3 ending this year
Luxembourg's Juncker will call early election as he lost coalition support on secret service scandal
Portugal's president Cavaco rejects early elections on 'political stability'
Wall Street closes mixed on Fed uncertainty
Bernanke strikes dovish tone, highly accomodative policy still needed
Several, half of, most of, few members are the words the fed used in its minutes and then, the market assumed it as September, before year-end or even the next year as options in the QE tapering. The USD declines further.
After that, The Federal Reserve's chairman Ben Bernanke stated in the Q&A after his speech on the Fed's century that "inflation and jobs are signaling more stimulus needed." Overall Bernanke's comments were very dovish as he is concerned about "highly-levered risk taking" positions. He stated that "if we had not mentioned taper, we might have seen more risk taking, more divergence between market expectations and ours."
Bernanke linked the QE and interest rates to the 6.5% unemployment target. But it will be "some time after" this number to see the first rate hike. However, according to the Chairman, the "housing sector has been positive for economy," but "low inflation is not good for economy."
Then The USD collapsed. Overall, the EUR/USD advanced to test the 1.2980 level after supporting the 1.2750 area. The GBP/USD attempted to recover ground and after trading mostly sideways in the whole session, the pair jumped to the 1.5000 area after Bernanke.
The USD/JPY declined to sub 100.00 levels and reach fresh 1-week lows at 99.40. As Valeria Bednarik wrote in a recent report, "the bullish momentum seen in yen crosses until May this year is becoming just a good memory as time goes by: yen weakness is no longer a given fact, and market players have already priced in all the facilities the BOJ can provide."
The USD/CAD collapsed to 1.0450 after the FOMC minutes but the cross returned fast to its previous levels around 1.0510. With Bernanke the pair has falling again and currently it is testing sub 1.0450 levels again. On the other hand, the AUD/USD performed its first negative day of the week on Wednesday; however the pair is currently rallying to test the 0.9200 area. The Gold advanced, despite minimal, on the day to $1,251/oz.
Meanwhile, the European drama remains more than alive. Portugal politicians rejected the idea to convoke for early elections on political stability and possibilities for a new bailout package. In Luxembourg, the sempiternal Jean Claude Juncker was forced to call early elections as he lost the support of his main partner in the government coalition. Luxembourg is inside a secret service scandal.
Furthermore, the Spanish government is working in the middle of a huge corruption plot. However, it seems they don't know what resign means. Sovereign bonds are rising...
Main headlines in the American session:
US: Wholesale Inventories fall further in May, against forecasts
ECB’s Asmussen says completion of banking union ‘most pressing need’
FOMC Minutes: About half of members see QE3 ending this year
Luxembourg's Juncker will call early election as he lost coalition support on secret service scandal
Portugal's president Cavaco rejects early elections on 'political stability'
Wall Street closes mixed on Fed uncertainty
Bernanke strikes dovish tone, highly accomodative policy still needed