This week could be called Ben Bernanke’s week as attention of all Forex traders was focused on the testimony of the Federal Reserve Chairman. The dollar was rising ahead for the speech, but tumbled afterwards.
Bernanke explained that policy makers will perform trimming of asset purchases when economic conditions warrant such a move and not at some predetermined date. At the same time, he thought it may well happen this year. He did not say in fact anything specifically new and the FX market could react to the comments in any manner. In reality, traders preferred to concentrate on the fact that reduction of stimulus is not imminent and were buying riskier currencies, driving the dollar down.
Other central bankers were not idle either. Stephen Poloz showed during his first meeting as the Bank of Canada head that he is much less hawkish than his predecessor. The Bank of England released minutes of its last meeting, demonstrating that the new Governor Mark Carney does not favor quantitative easing as a measure to revive economy (even though macroeconomic data suggests that QE actually worked and the economy looks healthier).
The yen was among few currencies that lost to the dollar this week. Parliamentary elections are held this week and it is expected that they will give more power to Prime Minister Shinzo Abe to pursue weakening of the currency. Meanwhile, some Japanese policy makers were arguing that term of monetary stimulus should be limited to two years, but such talks did not help the yen much.
EUR/USD went up from 1.3073 to 1.3143, while the weekly low was at 1.2992. GBP/USD climbed from 1.5108 to 1.5272. USD/JPY edged higher from 99.33 to 100.33. USD/CAD rallied from 1.0384 to 1.0440, but slumped later and closed at 1.0365 this week.
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