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Online Forex Trading News, Anlysis, Tips, Reviews, and Videos.Today, Fed Chairman Ben Bernanke will begin 2 days of testimony on Capitol Hill regarding monetary policy.  On the heels of one of the worst Consumer Confidence numbers in recent memory it will be somewhat difficult to weed through all of the political wrangling and double-talk that


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Today, Fed Chairman Ben Bernanke will begin 2 days of testimony on Capitol Hill regarding monetary policy.  On the heels of one of the worst Consumer Confidence numbers in recent memory it will be somewhat difficult to weed through all of the political wrangling and double-talk that is bound to arise from self-serving Congress-people.  That aside, pay attention to 2 things: 1) his recommendation for how to stimulate jobs growth—incidentally this is akin to Congress asking Bernanke to their job for them; and 2) any change to the language that he will keep rates at a record low for an “extended period”.  At some point, he will have to move on rates and last week’s move on the discount rate may be a harbinger of things to come.

In other news, German GDP came in flat as in they had no growth—which is actually positive in that their GDP is not negative from the previous quarter and meeting analyst expectations.  Asian markets were down big overnight, taking their cues from yesterday’s US stock market sell-off.  Commodities are lower yet I’m seeing general US dollar weakness.  So today is a mixed bag yet again.

In currencies:

Aussie (AUD):  The Aussie is mixed this morning as wage growth slowed at the slowest pace in close to 10 years, up .6% vs. analyst expectations of .8%.  The RBA is monitoring this figure closely to see if inflation pressures are mounting.  With Chinese demand expected to pick up and Australia to benefit greatly, the RBA is not afraid to raise rates if necessary.

Kiwi (NZD):  The Kiwi is down this morning in a case of “less-good” news than some of the other regions around the globe.  Tomorrow we will get a reading on New Zealand business confidence so that could hint at the consumer spending numbers and GDP which will also give a clue as to inflation.  While the Kiwi is “along for the ride” with the Aussie and is a destination for carry trades, its economy is not nearly as strong as its neighbor to the west.

Loonie (CAD):  The Loonie is higher this morning due to “Olympic Fever” and investors starting to catch on to the economic story in Canada.  Canada flies under the radar a little bit and sometimes gets too caught up in the US economy and oil correlation.  Incidentally, oil is off of its lows of the morning and is just barely negative.

Euro (EUR):  The Euro is bouncing back nicely from oversold conditions and is taking a break from all of the selling we’ve seen as of late.  German GDP figures came in as expected, thereby not providing cannon fodder for short-sellers.  Tomorrow is the real test for Germany though, as unemployment figures are due out.  Unless risk-aversion comes into play later today, I expect to see the Euro remain positive.

Pound (GBP):  Political uncertainties in addition to economic struggles are plaguing the Pound as of late.  A UBS report claims that the market is worried that the conservatives in government will push for deficit reduction pre-maturely before the British economy is in full-blown recovery mode, thereby adding additional pressure to Sterling.  In the meantime, additional bond buying has not been ruled out by the BOE—yet!

Dollar (USD):   The Dollar is mixed this morning, showing neither major gains nor losses vs. other currencies.  New home sales are due out this morning but at this point unless the number is ridiculously bad I can’t see it having any impact on the market.  Bernanke will be testifying for the next 2 days so expect the Dollar to trade cautiously unless Big Ben says something to upset the market.

Yen (JPY):  The Yen is seeing a bit on strength as of late, showing four days on gains in a row vs. USD.  Recently, the government spat with the Bank of Japan may be on to something as the former claims that the latter isn’t doing enough to prevent Yen strength.  As an exporting nation, we know that the Japanese want just the opposite—Yen weakness.

In overnight trading, the Asian markets were down, following the sell-off here in the US.  European markets are currently higher on the German GDP news, and stock futures are higher here in the US.

It looks like oil has climbed back to near flat from being down earlier trading at just a smidge under , and gold is lower trading at roughly 1095, higher than its lows of the morning but now under 00.

Look for light trading in the forex market as all ears are glued to the Bernanke testimony.  As painful as it may be to listen to politicians make fools of themselves, this could be an important if indeed there is going to be a policy shift.  My gut tells me it won’t be.

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