All eyes on Bernanke

Markets are heavily focused on Bernanke’s statement due later loday. Its all about QE2 and whether the US is going to continue to pump money into the system and buy its own government bonds in an attempt to keep interest rates low and therefore stimulate its own economy; much to the dissatisfaction of the rest of the world, who see their domestic currencies strengthen, weakening their exports and strangling their economic growth. Its difficult to see how all this intervention is actually going to work, because any short term gain, is probably going to be at a cost i.e. inflation which may be difficult to control with all that extra money in circulation. As far as the markets are concerened, the EUR/USD surges further above 1.41, and may have one more move up following a QE announcement from Brenanke later. The dollar has been weakening for several weeks now and maybe this is a situation of ‘buy the rumour..sell the fact’, in that the dollar may turn around after the dust has settled from this evening’s statement. Markets should certainly be quiet until then…


About Simon Brown
Simon Brown has over 20 years experience trading Derivatives on everything from Gold, FTSE to Dollar/Pound. Simon has lectured in Trading Psychology, Strategy and Technical Analysis, in addition to regular appearances on CNBC television. He is now Managing Director of ProSpreads.

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