US Dollar Eases on Bernanke Speech Ahead of FOMC Minutes - 20.11.2013

The US dollar was under selling pressure during Ben Bernanke’s speech last night with the US dollar index falling as low as 80.44. Bernanke added to the dovish expectations of monetary policy by agreeing with Janet Yellen’s previous week speech and at the same time he said that “asset purchases would slow when the economy has progressed sufficiently for the Committee to rely more heavily on its rate policies” also said “rates would remain low after bond buying ends”. For more clues on monetary policy timing we would remain cautious for on Fed 29-30 Oct. meeting minutes release later today.

Moreover, the Euro against the greenback inched to 3-week high at the 50.0% of previous slide from 1.3832 to 1.3318, at 1.3576 underpinned by current Fed chairman speech. We consider the latest upside correction could be a good opportunity for traders to position their selves on the short side. Recent data for Euro zone haven’t been supportive as the ZEW Economic Sentiment indicator released yesterday disappointed expectations thus we would anticipate some pressure on the EURUSD.

The Euro against the Japanese Yen jumped to a 4-year high at 136.94 in recent trading amid improved risk appetite has weakened the Japanese Yen while the Euro was underpinned by Joerg Asmussen, a top ECB official, saying that ECB must be very careful on using negative deposit rate. However, Asmussen also said that ECB monetary policy would remain expansionary for as long as necessary pushing the common currency back down.

Elsewhere, the USDJPY is extending in 100.40/99.55 range pattern as recent economic data and traders’ sentiment has been mixed with latest data indicating that Japan’s Trade deficit widened contradicting improved risk sentiment. Further, the Australian dollar eased lower at 0.9380 as opposed to greenback, despite that risk appetite was reinforced by Bernanke’s comments. Concerning coming events we are alerted by Bank of England MPC votes, then watching US Retail Sales and Home Sales data, the day closes with the release of FOMC meeting minutes.