The dollar continued to lose ground to the euro and the pound in the New York trading session as Ben Bernanke took questions for the first time following a US Fed Funds release. Tomorrow US GDP should signal a pickup in economic activity which should keep the current trend of dollar selling intact.
The EUR/USD looks to close on its daily high at 1.4790 from 1.4683 after Fed chief Ben Bernanke said the Fed will carry out the full $600B of Treasury bond purchases in QEII. The Fed does not expect an end to the bond buying program to have a significant impact as this move has already been priced in to financial markets. A slight pickup in inflation expectations has been noted but not significant enough to warrant an adjustment to the ultra-loose monetary policy of the US.
The GBP/USD traded erratically after today’s Q1 GDP release of 0.5% which was in line with market expectations. The currency pair is also trading on its high at 1.6630 from 1.6500.
Later tonight Kiwi traders will be expecting no adjustment to the New Zealand interest rate by the RBNZ which currently stands at 2.50%. Economists are also forecasting the Bank of Japan to hold interest rates steady below 0.10%.
Tomorrow’s highlight will be US Advanced GDP for Q1 2011. Expectations are for an increase of 1.9%.
The trend for dollar selling looks to continue as Bernanke signaled his intention to keep the US ultra-loose monetary policy in place until the economy begins to show significant improvements in unemployment and growth statistics.
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Russell Glaser is a Currency Analyst with ForexYard. Russell provides analysis in the FX spot market by employing fundamental research methodologies. In addition to currencies, Russell closely follows the correlation between the Commodities market and the movement of equities. His writings have been published on the ForexYard Trading Blog and associated partner sites. Prior to joining Forexyard, Russell Glaser served as a management consultant in the financial services industry, advising Fortune 100 companies. Russell holds a degree in finance from the Fisher College of Business at The Ohio State University.
