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Larry Summers’s Pulling Out of Federal reserves Pulls The U.S. Dollar Down

September 15, 2013 in Forex Fundamentals and News

Larry SummersU.S. Dollar fell sharply with the opening of Asian session on Monday 15th. The move took EUR/USD from 1.3295 to 1.3382 within 2 hours. GBP/USD went up from 1.5875 to 1.5951 and AUD/USD jumped from 0.9245 to 0.9394 before settling down a bit. The strong moves were surprising as most of the markets are still sleeping as even Japan is yet to wake up. And even when it wakes up it’s the national holiday today. But then a small news can always shake the market badly and Larry Summers’s  pulling out of the FED race came as a big news.

Larry Summers, who was the former U.S. Treasury Secretary and one of the front runners to succeed Ben Bernanke as the head of the Federal Reserve (the U.S. central bank), pulls out of the race.

The other main candidate in the race has been the current vice-chairman of the Federal Reserves, Janet Yellen.

President Obama’s remarks, after Larry Summers letter to him about his decision to pull out, added to the bearish sentiments.  Obama said in a statement: “Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today.”

GBP/USD

USD falls against the GBP

The U.S. dollar fell against the British pound sharply and GBP/USD rose and broke up some critical resistances. The break over the resistances indicate that the pair may target the next resistance zone of 1.6000 to 1.6015 and possibly higher as indicated in the weekly GBP/USD outlook, which was posted 2 days back.

EUR/USD

EUR/USD and upcoming resistances

During the last week the pair had been in a sideways range for a good part of the week. Today’s jump made it break over that range but resistance is still expected in 1.3405 to 1.3452 resistance zone. The hurdle at 1.3452 may prove to be very strong but as we had mentioned in the weekly EUR/USD predictions that the fear of 1.3500 has been much less than the fear of 1.2500 and sooner or later a break over 1.3500 should take place, may be now is the time.

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