Bernanke to derail the EUR trend?
03/20/2012
The mighty, somewhat subjective dollar, has managed to claw back some of its recent losses in the overnight session. Until now, the buck has been trading close to its weekly lows outright on speculation that the Fed Chair Ben Bernanke will reiterate today that a slow US recovery warrants near-zero interest rates.
The market does not expect the Fed to change its recent rhetoric, policy members are going to still characterize the recovery as somewhat tepid. Bernanke is to deliver a speech at George Washington Business school later this morning and it’s here that we can expect the markets to be reacting to any hint that additional asset purchases remain possible.
The ‘reserve’ currency of choice has been the third worst performing currency amongst the ten most developed currencies in the past week. Unlike the EUR, which has managed to climb close to +0.7%.
Yesterday, New York Fed Dudley stated that signs that the US economy improving “does not dispel risks that include rising gas prices and a weakened housing market.”
The dollar has gotten its lift on the back of Asian equities underperforming due to China raising gas and diesel prices by the most in two-years (+7%). This is the second hike in two-months, amid rising global crude prices. Investors are beginning to question even more if a Chinese slowdown will happen and if it will be a hard landing or a soft landing? Earlier this month, Premier Wen Jiabao announced an economic growth target of +7.5% for this year, down from the ever present +8% that the market had come accustomed to over the past seven-years. With their economy beginning to shift focus more onto consumers and away from the large infrastructure projects may worry investors that the economy is slowing even further.
It seems that official Asian dollar buying has managed to test the optioned supported 1.32 ahead of the US open. Scattered stops in the upper high 1.31’s should allow the dollar to gain even more ground. However, the market is a buyer ahead of the 30-day moving average, keeping alive the bias to the topside. The technical short term target would be an eventual break above yesterday’s high of 1.3266 to this months high of 1.3291. Despite the upward bias, the market again seems happy selling into the these rallies at the moment.
03/20/2012
The mighty, somewhat subjective dollar, has managed to claw back some of its recent losses in the overnight session. Until now, the buck has been trading close to its weekly lows outright on speculation that the Fed Chair Ben Bernanke will reiterate today that a slow US recovery warrants near-zero interest rates.
The market does not expect the Fed to change its recent rhetoric, policy members are going to still characterize the recovery as somewhat tepid. Bernanke is to deliver a speech at George Washington Business school later this morning and it’s here that we can expect the markets to be reacting to any hint that additional asset purchases remain possible.
The ‘reserve’ currency of choice has been the third worst performing currency amongst the ten most developed currencies in the past week. Unlike the EUR, which has managed to climb close to +0.7%.
Yesterday, New York Fed Dudley stated that signs that the US economy improving “does not dispel risks that include rising gas prices and a weakened housing market.”
The dollar has gotten its lift on the back of Asian equities underperforming due to China raising gas and diesel prices by the most in two-years (+7%). This is the second hike in two-months, amid rising global crude prices. Investors are beginning to question even more if a Chinese slowdown will happen and if it will be a hard landing or a soft landing? Earlier this month, Premier Wen Jiabao announced an economic growth target of +7.5% for this year, down from the ever present +8% that the market had come accustomed to over the past seven-years. With their economy beginning to shift focus more onto consumers and away from the large infrastructure projects may worry investors that the economy is slowing even further.
It seems that official Asian dollar buying has managed to test the optioned supported 1.32 ahead of the US open. Scattered stops in the upper high 1.31’s should allow the dollar to gain even more ground. However, the market is a buyer ahead of the 30-day moving average, keeping alive the bias to the topside. The technical short term target would be an eventual break above yesterday’s high of 1.3266 to this months high of 1.3291. Despite the upward bias, the market again seems happy selling into the these rallies at the moment.