The second US session of the week sees a second session of US speakers and a second session of USD sell off. Is the market smelling a dovish talk from Bernanke? Or is it an opportunity to buy the greenback?
After correcting the previous Evans-generated sell-off, the dollar began retreating towards the speech of the first speaker, and continues sliding as the second speaker talks.
When Federal Reserve Bank of Saint Lousi James Bullard began talking, the US dollar already began falling: EUR/USD climbed towards 1.29, despite leaning towards a bearish trend resumption. USD/JPY slipped back from the highs (ignited by a flip in Amari’s comments) and AUD/USD began climbing towards 0.98.
Bullard said that rates could be taken to negative ground, but that there isn’t enough support at the Fed. What about tapering? Bullard wants QE to continue according to incoming data. There is no tendency in either direction, and this was enough to support the dollar weakness.
Bullard was followed by Dudley. Contrary to Evans, Bill Dudley, president of the NY Fed, said that the fiscal drag is significant and noted that this is a factor that is watched.
Contrary to Williams, who spoke on Thursday and talked a potential tapering as soon as this summer, Dudley said that tapering QE would occur “at some point”, and that the next change in QE could be up or down.
This all supports the Aussie, yen, euro and other currencies against the dollar. The pound also rose from the lows. It was earlier hit by weak inflation numbers.
The Chairman of the Federal Reserve, Ben Bernanke, will appear tomorrow, in a highly anticipated testimony.
More: AUD/USD: Where next after the collapse? A look at the big levels
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