Forex Traders Reacting to Bernanke’s Comments

The U.S. Dollar is mounting a strong gain against most major currencies at the midsession.

The U.S. Dollar is mounting a strong gain against most major currencies at the midsession. Traders are reacting positively toward the Dollar after yesterday’s hawkish comment from Fed Chairman Bernanke. In his statement, Bernanke called for a tightening of Fed monetary policy once the U.S. economy “has improved significantly.”

The EUR USD is paring its gains from earlier in the week as traders assess the Fed’s comments. Traders are also waiting for a reaction from the European Central Bank regarding Bernanke’s statement.

Fundamental and technical issues continue to pressure the GBP USD. Because of Bernanke’s comments, British Pound traders now feel that the U.K. will be one of the last to raise interest rates.

The USD JPY is mounting a strong gain at the midsession. Yesterday’s move through .8800 was not enough to attract new sellers and traders quickly covered their short positions. Bernanke’s comments about raising interest rates is causing Yen traders to lighten up long positions on the thought that the Japanese Yen will become a carry currency once the Fed begins to raise rates.

The USD CAD is under pressure following a report showing that the number of Canadian jobs created was greater than expected. Another report showed that businesses were optimistic about an economic recovery. Losses have been limited by lower energy and equity prices.

Lower demand for higher yielding assets is pressuring the AUD USD and NZD USD. Traders are taking a little off the top following the strong rallies this week in the Australian and New Zealand Dollar. Losses are likely to be limited in the Aussie as traders may start buying on a break in anticipation of another central bank rate hike in November.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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