- Trichet: Right to worry about bank write-downs; improved financial markets allowing for gradual removal of extraordinary measures; repeats importance of US strong dollar policy, cautions need for flexibility for emerging Asian currencies
- S&P places Greece on creditwatch for downgrade to A- rating
- Conference Board Employment Trends Index rises to 90.8 in November from 89.2 in October
- Bernanke: Still looking at extended period of low rates; inflation risks to the downside; recovery to be moderate, unemployment to fall slowly
- UK’s Darling: Can’t do more than cut deficit in half in four years without hurting recovery; won’t do anything to undermine UK financial sector
- UAE asks local banks to disclose exposures to Dubai World: Reuters
- US consumer credit falls much less than expected
- Gold closes at $1158; firms after dovish Bernanke speech
- US equities close 0.25% lower; can’t hold gains after Bernanke; Oil falls $1.50 to $73.98
- US 10-year note yield closes 3 bp lower at 3.43%
EUR/USD rallied strongly at midday as Fed chairman Bernanke indicated monetary policy will not be altered anytime soon despite last week’s firmer employment report. EUR/USD triggered stops above 1.4850, reaching 1.4890 before stalling and beginning a surprisingly sharp pullback. We dipped as low as 1.4804 in afternoon trade. It seems abundantly clear that EUR/USD sellers are lined up to take advantage of strength to lighten long positions on the approach of 1.4900/30.
USD/JPY slipped sharply, accelerating losses that had been underway for the entire US session, after Bernanke. We dipped briefly below 89.10 before rebounding into the 89.50 area as the dollar recovered broadly later in the session.
GBP/USD was boosted by the Bernanke comments, reaching 1.6485, but dips were more shallow than in EUR/USD, as EUR/GBP slipped along with EUR/USD. The cross ends the session on its lows, at 0.9010.