Daily FX Market Outlook by AceTrader 10-2-2011

Market Review – 09/02/2011 20:10 GMT

Euro rises as Fed’s Bernanke expects U.S. unemployment rate remains high

Euro rose on Wednesday after Federal Reserve Chairman Ben Bernanke reiterated U.S. unemployment would remain high together with the fall in U.S. Treasury yields.

Although euro retreated after recovering fm Asian low of 1.3613 to 1.3663 n price fell to an intra-day low of 1.3610 in reaction to the news that Bundesbank chief Axel Weber is not a candidate to succeed European Central Bank President Jean-Claude Trichet, the single currency later rebounded strongly in NY morning after Federal Reserve Chairman Ben Bernanke started speaking n euro eventually climbed to as high as 1.3745 in late NY session on dlr’s broad-based weakness.  
Federal Reserve Chairman Ben Bernanke testified at the House Budget Committee and said U.S. unemployment rate remains too high for policymakers’ comfort despite signs of strength in the economic recovery. Bernanke repeated overall inflation ‘quite low’ n added longer-term inflation expectations have remained stable.  
The British pound ratcheted high fm Asian low of 1.6050 to 1.6101 in European morning n although cable retreated to 1.6032 after the release of the biggest deficit on record, price then rebounded strongly to 1.6125 in tandem with the euro in NY morning b4 trading sideways. U.K. global goods trade balance came in at -9.247 bln pounds in December, the biggest deficit on record, against the economists’ forecast of -8.60 bln pounds n revised reading of -8.46 bln pound in November. U.K. global non-EU goods trade balance was at -5.82 bln pounds in December, also the biggest deficit on record.   
Versus the Japanese yen, the dollar went through another day of choppy trading on Wednesday, price initially ratcheted higher fm Asian low of 82.25 to 82.68 in European morning but selling interest there knocked the usd/jpy pair down n although the greenback rebounded in NY mid-day, the pair then fell to a low of 82.20 in late NY session on dlr’s broad-based weakness as U.S. bond yields fell after a solid $24 billion auction of 10-year Treasury notes. Ten-year Treasury note yields were down fm around 3.7% to 3.64%.   
Data to be released on Thursday:  
Japan domestic CGPI, machine order, Australia unemployment n employment change, Swiss CPI, U.K. industrial production, manufacturing production, BoE rate decision, Canada new housing price, U.S. jobless claims, wholesales inventories, Fed budget.