Risk-aversion continues to dominate markets on intervention speculation from Japan and Switzerland and as US may talk about introducing the third round of quantitative easing as the current economic assessment points towards continuous weakness. Yen and Franc weakened against the Dollar on these intervention talks to curb the currency strength as USDJPY dropped to record lows of 75.95 on Friday after Japan’s FM Noda said he’s ready to take decisive steps after the currency’s gains. USDCHF traded at 0.7840 as SNB also readies to curb Franc’s gains. EURUSD traded at 1.4395 lows before tomorrow’s manufacturing data. The franc weakened against all its 16 major counterparts amid speculation the SNB will introduce new measures to damp demand for Franc while Noda said he’s become “more concerned about the worsening of the yen’s one-sided movements” and the government will take “bold actions if necessary and won’t rule out any possible options.”
Gains in the dollar were limited amid speculation Fed’s Bernanke will signal on Aug. 26 that the Fed will increase monetary stimulus to boost the economy. The central bank bought $600 billion in Treasuries from November through June in a process known as quantitative easing or QE2. The Fed said that U.S. economic growth was “considerably slower” than anticipated and it’s prepared to use a range of policy tools to boost the economy. It pledged to keep interest rates near zero at least until mid-2013. The market focus is on Bernanke’s speech this week, and there may be increasing downward pressure for the dollar, should he mention the possibility of QE3.
The economic calendar is thin today but focus would be on central bank meetings and focus on intervention and Friday’s Fed’s Bernanke’s speech talking on a possible QE3.
Gains in the dollar were limited amid speculation Fed’s Bernanke will signal on Aug. 26 that the Fed will increase monetary stimulus to boost the economy. The central bank bought $600 billion in Treasuries from November through June in a process known as quantitative easing or QE2. The Fed said that U.S. economic growth was “considerably slower” than anticipated and it’s prepared to use a range of policy tools to boost the economy. It pledged to keep interest rates near zero at least until mid-2013. The market focus is on Bernanke’s speech this week, and there may be increasing downward pressure for the dollar, should he mention the possibility of QE3.
The economic calendar is thin today but focus would be on central bank meetings and focus on intervention and Friday’s Fed’s Bernanke’s speech talking on a possible QE3.
By
M.Zohaib Gadit
Forex Trading Consultant, Shivani Financial
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