Dollar rebounds as Bernanke vague on further easing
Source: BI-ME with Reuters , Author: Posted by BI-ME staff
Posted: Tue July 17, 2012 6:01 pm

INTERNATIONAL.  The dollar rallied on Tuesday after Federal Reserve Chairman Ben Bernanke said the central bank is prepared to boost a slowing U.S. economy, but offered few details.
   
Investors had expected Bernanke to drop more hints about further monetary stimulus and when he did not specify measures to lift the economy, they covered their shorts on the dollar.
   
Comments about another round of quantitative easing would have weighed on the greenback, as this would mean flooding the financial system with dollars, which would diminish the currency's value.
   
"There's nothing new (in Bernanke's testimony), and the fact that he avoided any mention of specific steps clearly indicates there is going to be no increase in asset purchases or new stimulus in August," said Kathy Lien, managing director at BK Asset Management in New York.
   
"They are really just biding their time until the September meeting. This is far less dovish than the market had anticipated, which is why we're seeing such a significant dollar rally."
   
Bernanke said the Fed stands ready to offer additional support to the U.S. economy, but did not give specific measures. He added that the U.S. recovery is being held back by Europe's debt crisis and uncertainty surrounding U.S. fiscal policy.
 
The euro hit session lows against the dollar at US$1.2187 in the aftermath of Bernanke's comments. It was last US$1.2218, down 0.5% on the day. Stops at US$1.2240 were
taken out as did bids at US$1.2210-US$1.2200, traders said.
   
The euro also hit a fresh 3-1/2-year low vs sterling at 78.27 pence,, dropping to a record trough against the Australian dollar at A$1.18988. 
   
The dollar also reversed losses against the Swiss franc to trade 0.5% higher at 0.9836 franc, gaining 0.3% versus sterling, and 0.4% versus the New
Zealand dollar.
   
Still quantitative easing is not exactly off the table, Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington, told Reuters, and as a result "the dollar may have limited upside scope and should buy the dollar some time to test fresh highs."
   
The Fed last month expanded efforts to keep long-term interest rates low by announcing it would buy an additional US$267 billion in long-term bonds while selling short-term securities.
   
However, it held off from launching a third round of outright bond purchases that would expand its balance sheet, a form of stimulus known as quantitative easing (QE). Bets on more QE grew after disappointing U.S. retail sales data on Monday.
   
The greenback also firmed 0.1 percent against the yen to 78.99 yen, a day after dropping to one-month lows.
   
Expectations that the Bank of Japan could intervene and check gains by the yen was keeping investors wary of that pair, traders said.
   
Japanese Finance Minister Jun Azumi hit out at speculators betting on gains in the yen due to weak U.S. economic data, and hinted the government was prepared to intervene to stem excessive moves.

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: September 1, 2014
UAE. The Middle East's top brands have grown by an average of 38%, according to The Brand Finance Middle East 50; This brings the total value of the top 50 above US$50 billion for the first time; Emirates holds the top spot and remains far ahead of the rest.
date:Posted: September 1, 2014
SAUDI ARABIA. Consumer spending also remained robust; Non-oil exports rebound owing to greater production of petrochemicals and plastics.
date:Posted: September 1, 2014
INTERNATIONAL. Oil markets since 2011 have become less price sensitive to actual supply disruptions, especially to those geopolitical events that have taken place since the Arab Spring.
UAE. The Middle East's top brands have grown by an average of 38%, according to The Brand Finance Middle East 50; This brings the total value of the top 50 above US$50 billion for the first time; Emirates holds the top spot and remains far ahead of the rest.
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