Bernanke Still Says Not Good Enough
Fed Chair Bernanke continues to sound like a leader who is prepared to fire up the printing press. Tuesdays trading was very quiet with USD leading and AUD lagging. There are no significant data or events in Asia-Pacific trading. The Premium trades from Monday evening are mostly in progressEURUSD, GBPJPY, USDCAD and AUDUSD, as well latest charts on EURUSD Golden Cross and the 84% 4-year effectiveness. See below for more detail.
Bernanke spoke to ABC in an interview saying the sees good news on growth but that the US has a long way to go on the recovery. He said the Fed must be ready to respond to how the economy evoles and that unemployment may not fall much if the economy continues at 2-2.5% growth. The current consensus forecast is for a 2.2% increase in GDP this year.
Bernanke said the Fed was optimistic early in the recovery but now needs to be realistic and needs to be cautions in sustaining it. He believes gas prices are unlikely to stall the recovery but could hurt growth.
Economic data was lukewarm with consumer confidence at 70.2 compared to 70.0 expected. The Richmond Fed slipped to 7 from 20, less than the 18 consensus.
Comments from Rosengren and Fisher showed the divide at the Fed. Fisher forecast 3% growth this year and noted improving growth prospects. Rosengren pointed to risks from fiscal policy and said the jobs picture will not get better unless growth picks up.
EUR/USD was stuck in a tight range between 1.3317-1.3348 for most of the session but inched below the lower band at the close. Its unclear if softer US growth will create a classic risk on trade, or if it will generate dollar selling on heightened QE speculation.
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