November 24, 2010
Easy Pips Daily Fx Trader News
The week began with rocky, volatile trading nevertheless concluded with a whimper as Friday’s buying and selling mimicked the quiet market from Thursday. The euro and Swiss franc listed very small increases and were the top performers while Australian dollar and British pound lagged.
Newsflow within the North American program was light. The market was predominantly digesting China’s choice to boost its bank reserve ratio and Fed Chairman Ben Bernanke’s harshest words yet for China.
The trading day commenced with a small risk-off theme after the reserve ratio hike. China contains a sneaking inflation trouble that is probably going to advance into a more precarious increase. Officials increased the reserve ratio last week and did so yet again on Friday, by 50 basis points. The move cooled commodity prices and is a threat to worldwide expansion, especially in the Asia-Pacific area. The effect was a fifty pip fall in the Australian dollar.
Ben Bernanke did not directly name China yet stated its steps may contribute to a dismal end result. “Although the parallels are certainly far from perfect, and I am certainly not predicting a new Depression, some of the lessons from that grim period are applicable today,” Bernanke said. “In particular, for large, systemically important countries with persistent current-account surpluses, the pursuit of export-led growth cannot ultimately succeed if the implications of that strategy for global growth and stability are not taken into account.”
Fed Chairman Ben Bernanke also called for U.S. political figures to do more to stimulate the overall economy and reduce unemployment. “On its current economic trajectory, the United States runs the risk of seeing millions of workers unemployed or underemployed for many years,” he said. “As a society, we should find that outcome unacceptable.”
Bernanke commentary were more geared at the importance of fiscal stimulus in lieu of deficit cutting for the short term. If such policy suggestions are put in place, they may weigh on the U.S. dollar.
“In general terms, a fiscal program that combines near-term measures to enhance growth and strong, confidence-inducing steps to reduce longer-term structural deficits would be an important complement to the policies of the Federal Reserve,” he said in a speech in Frankfurt. Content provided by AroundFX.com
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