(US) Fed Chairman Bernanke: Q&A Session With Members Of The Committee:
How to interpret these headlines?
Market is obviously disappointed over the relative lack of mention for further stimuli by Bernanke today and as a result, EURUSD dropped sharply and breached the 1.2200 level. Going forward, with Bernanke pretty much sticking with the same stance during the last FOMC Meeting Statement, we are likely to see further strength in the USD as expectations for QE3 diminish.
Bernanke will continue his testimony tomorrow in front of the House, which in my opinion will probably not be as market moving as today; however, market will be operating under the same sentiment that no QE3 is coming, therefore I’d expect to see USD strength continuing throughout the day.
Another observation that I’d like to share is that market sold off USD prior to Bernanke’s testimony on speculations of potential QE3, and with Bernanke’s testimony today shattering the potential of a QE surprise, I believe we may see some pre-selling of Euro tomorrow as market shifts its focus away from US to the turmoil in Europe, specifically with Spain and Greece… Therefore, EURUSD should be a sell on rally, a position that I have been maintaining for some time.
Highlights Of Bernanke’s Semiannual Monetary Policy Report
July 17, 2012 by 6 Comments