Daily review – Global currencies – 18 July
July 18, 2013 in Forex Analysis
The US dollar rose against most of its rivals on Thursday, after the Fed’s Chairman Ben Bernanke spoke before Congress in a two-day testimony – its last day being today. Bernanke confirmed what market participants already knew: the central bank will change the asset-purchase parameters only when certain economic goals are reached. During the meeting, he emphasised the importance of separating the QE tapering from the notion of economic austerity policy. According to him, a clear distinction between them is necessary because the latter could lead to negative consequences for the US economic recovery. However, Bernanke’s speech was met with strong criticism by Republicans questioning the Fed’s measures and their strong and more evident effect on ‘’the Wall Street rather than the Main street”.
At the beginning of the session, traders started selling the dollar; but then bet on it again, amid prospects that the Fed will reduce its stimulus programme by the end of the year. This morning the dollar was slightly lower against the euro than its yesterday’s intraday high at 1.3091, trading at 1.313 at the time of writing.
The greenback managed to gain ground against the yen after yesterday’s Bernanke speech and was trading at 100.16 at the time of writing.
Meanwhile, the British pound increased sharply after the Bank of England meeting minutes were published. The report showed that all board members have voted unanimously to keep the current QE unchanged. Among other UK economic results, data showed that the number of unemployed people has decreased by 21,200, opposite forecasts for a decline by 8,000, which was a further boost for the sterling’s chart performance. At the time of writing, the pound was trading at 1.5196.
The Australian dollar, on the other hand, slipped slightly and was trading at 0.9169 at the time of writing.
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