Currency news - Bernanke under pressure

Bernanke under pressure - 14-02-08

The dollar pushed to highs around 1.4530 in New York on Wednesday before weakening back to around 1.4580 with conflicting pressures.

Headline retail sales rose 0.3% in January compared to expectations of a small decline while there was also a 0.3% underlying increase for the month. Gasoline sales were strong while there was further weakness in building materials sales. Although confidence will remain very fragile given that the underlying report was generally weak, the sales rise may dampen expectations of further aggressive Fed action to support the economy.

In this context, comments from Fed Chairman Bernanke will be watched very closely on Thursday for further evidence on the Fed's attitude towards monetary policy. Signals of further aggressive rate cuts would tend to undermine the US dollar.

Although positive economic news should provide some dollar support, the data will also help ease risk aversion to some extent. This will tend to lessen defensive demand and solid data will, therefore, have a mixed impact on the US currency. The dollar was on the defensive on Thursday with losses to 1.4630 against the Euro.

Tim Clayton
Investica Ltd
E-mail: tim.clayton@investica.co.uk
+44 (0) 1452 781001

Full list of daily currency analysis

This analysis report is intended for distribution to ACM Advanced Currency Markets SA private, corporate customers and members. Information contained in this report is based on data obtained from sources considered to be reliable, however, no guarantees be made by ACM Advanced Currency Markets SA as to the accuracy, timeliness and completeness of the data. The opinions and forecasts contained herein are subject to change without notice and ACM Advanced Currency Markets SA accepts no liability for any losses, damages and/or expenses incurred arising from or in any way connected with the utilisation of all or part of this report. This report is meant for information purposes and is not intended to be and should not be construed as an offer or solicitation to buy, sell foreign exchange or indeed any other financial instruments. This report, or any part of it may not be reproduced or distributed without the prior consent of ACM Advanced Currency Markets SA.