Bernanke In Washington Today
09-02-2011
The major currencies once again languished within known ranges for the most part on Tuesday. After months of rather swift and volatile trading, two days in a row of rather calm waters has left many traders asking which ‘event’ will trigger another fast market. The USD continues to find itself near the weaker elements of its value against the EUR and GBP. Although the USD did bounce back late last week and has held onto some of its gains it does find itself getting plenty of pressure. There was no major data released from the U.S yesterday, but today Fed Chairman Ben Bernanke will appear before Congress and give testimony about the outlook for the U.S. economy. This will be followed by tomorrow’s weekly Unemployment Claims numbers.
Germany released their Industrial Production numbers yesterday and they disappointed with an outcome of minus -1/2%, which was below the expected gain of 0.2%. Some analysts were quick to point out that the dip in production was a weather related event. However what may raise alarm bells among some investors is that ‘bad weather’ has now been blamed for a host of reports spanning from the U.K, the States, and Germany. What this means is that next month’s reports will become critical if they do not show the improvement that so many officials have been publically speculating on. The U.K. suffered a poor GDP report, the States just had a bad Jobless number, and now Germany has seen Production fall and many are pointing to the long cold winter as a culprit. But is that really the case? The German Trade Balance and the U.K. Trade Balance reports will both be brought forth today and both are expected to be near the previous month’s results. Both the EUR and GBP have done well and have managed to hold onto their gains as we enter the middle of the week, even after seeing some pressure put on them before going into last weekend.
The JPY and AUD are both near known values. The JPY has lost a touch of ground to the USD in recent trading but it is still well within the stronger parts of its range. This comes even as the debt questions in Japan are gaining momentum and have officially been designated as an underlying problem by ratings agencies. The AUD did lose a sliver of value to the USD on Tuesday, but still finds itself near the higher parts of its range. Gold did muster some gains on Tuesday and its value as of this writing is about 1363.00 USD, which may prove an interesting juncture for some traders. Gold has climbed back from the lows it made and has exhibited consolidation with some upside short term momentum.
In another interesting development in Asia earlier today, China has once again amped up their interest rate. But it must be pointed out that the Chinese interest rate remains well under the current rate of inflation that is being experienced in China. The Chinese are trying to get a hold of the rise in prices in their domestic market, while trying to keep their own currency cheap in order to maintain their exports which have helped bolster their economic prowess.
The broad markets may find some cautious movement until Fed Chaiman Ben Bernanke speaks in the U.S. today, and his speech will be monitored by many interested market participants globally.
