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Forex Recap & Ranges: Dollar Falls on Bernanke

Posted by Akhilesh Ganti on Nov 19, 2013 10:56:00 PM

Bernanke's comments sent the US Dollar lower -vs- all the majors except the Japanese currency as he seemed to agree with a lot of Yellen's stated views on QE and the economy. These remarks, aside from reassuring the markets that the tapering process is not imminent, appeared to be paving the way for a smooth transition from the Ben Bernanke FED to the Janet Yellen FED.

The salient points were:

  • FED must and will do all they can now to ensure a robust recovery
  • Majority of the members believe that QE and forward guidance is helping as there have been meaningful signs of improvement in the labor market.
  • Tapering will begin only if jobs growth and medium term inflation continues to align with projections.
  • Fed funds rate is likely to stay at zero well after the 6.5% unemployment threshold is crossed as long as inflation remains under control. This, more than any other statement, is a reflection of Yellen's viewpoint as he had earlier implied that around 7% was his unofficial benchmark.
  • FOMC remains committed to a very easy monetary policy as long as its needed and asset buying is solely dependent on economic outlook.

There are a couple of central banker events that are due out today. It starts with UK's MPC Official Bank Rate Votes with the market expecting all 9 members to vote to hold policy steady. This is followed by the FOMC minutes and one can assume that the tenor of this missive will mimic Bernanke's statements. Sandwiched between these are the US Retail Sales and Existing Home Sales data.

Ranges:{WWM's New ALPHA Trader-4hour charts [EUR,GBP,AUD,YEN,GOLD,OIL,WallStreet]}(click to enlarge)
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