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Dollar Falls as Bernanke Says He’s Prepared to Add More Stimulus

post #1 of 11
Thread Starter 

http://www.bloomberg.com/news/2012-04-25/dollar-falls-as-bernanke-says-he-s-prepared-to-add-more-stimulus.html

 

 

Dollar Falls as Bernanke Says He’s Prepared to Add More Stimulus
By Catarina Saraiva - Apr 25, 2012 2:04 PM GMT-0700


The dollar fell against most of its major peers after comments by Federal Reserve Chairman Ben S. Bernanke that he’s prepared to “do more” to boost the economy raised concern more monetary stimulus will debase the greenback.

Bernanke’s comments at a press conference after the central bank left borrowing rates unchanged while saying economic growth will accelerate pared the dollar’s gain versus the yen. South Africa’s rand and the Australian and Canadian dollars climbed as stocks rallied.

“Bernanke is definitely providing additional color to the Federal Reserve’s forecast,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. “The Fed chairman is perceived by the market as someone who is willing to be patient and cautious in terms of making any policy moves.”

The dollar fell 0.2 percent to $1.3217 per euro at 5 p.m. in New York. It touched $1.3237 earlier, the highest level since April 4. The greenback was little changed at 81.34 yen after rising earlier as much as 0.5 percent. Japan’s currency fell 0.2 percent versus the euro to 107.52.

The rand climbed 0.6 percent to 7.7493 per dollar, and the Aussie, as Australia’s currency is nicknamed, added 0.4 percent to $1.0353. Canada’s dollar strengthened 0.4 percent to 98.34 cents to the greenback.

Riskier assets traditionally benefit from stimulus programs as investors search for higher returns, shunning the low yields of nations such as the U.S. and Japan.

The Standard & Poor’s 500 Index rallied 1.4 percent.
‘More as Needed’

“We remain prepared to do more as needed to make sure that this recovery continues and that inflation stays close to target,” Bernanke said at a press conference following a two- day meeting of the Federal Open Market Committee in Washington.

Fed policy makers upgraded their forecasts for growth and unemployment this year while repeating their view that borrowing costs are likely to remain “exceptionally low” at least through late 2014.

They now see the jobless rate averaging between 7.8 percent and 8 percent in the fourth quarter, compared with estimates in January of 8.2 percent to 8.5 percent. The economy is forecast to grow 2.4 percent to 2.9 percent, versus 2.2 percent to 2.7 percent.

“There’s a very muted market reaction,” said Mark McCormick, a currency strategist at Brown Brothers Harriman & Co. in New York. “Right now, the U.S. economy appears to be moderating, and we’re stuck in this zone of inaction where the Fed is in a wait-and-see mode.”
Low-Rate View

Policy makers led by Bernanke are holding off on additional steps to boost the economy amid signs the more than two-year expansion is gaining strength. Still, the jobless rate isn’t declining fast enough to satisfy central bankers, who repeated their view today that borrowing costs are likely to remain “exceptionally low” at least through late 2014.

The central bank bought $2.3 trillion of assets in two rounds of stimulus known as quantitative easing between December 2008 and June 2011. The Dollar Index (DXY), which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, lost 14 percent during that period.

The Fed has also kept its benchmark interest rate at zero to 0.25 percent since December 2008.

The greenback dropped earlier versus most major peers as Commerce Department data showed U.S. durable goods orders slid 4.2 percent in March, the biggest decrease since January 2009, after a revised 1.9 percent gain the prior month. Economists forecast a 1.7 percent decrease, according to the median estimate in a Bloomberg News survey.
Worst Performers

The dollar has weakened 2.6 percent this year, the second- worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The yen has tumbled 8.5 percent.

The pound fell today from a seven-month high versus the dollar after a government report showed the U.K. slipped back into recession, backing the case for the Bank of England to extend its asset-purchase program.

The British currency dropped as much as 0.4 percent to $1.6082 was little changed at 81.78 pence per euro after gaining to 81.44 pence yesterday, the strongest since August 2010.

Hungary’s forint was the best-performing currency after a government official said the country can start financial-aid talks with the International Monetary Fund and the European Union as soon as it passes legislation required by the EU.

The currency rose 2.2 percent to 217.53 per dollar and added 2.1 percent to 287.56 per euro.
Won’t Ratify Pact

The euro weakened earlier versus the dollar after Francois Hollande, the leading candidate to become France’s next president, said the country won’t ratify the euro fiscal pact in its current form if he is elected. He spoke at a press conference in Paris.

Hollande, a Socialist, has also criticized austerity measures imposed throughout the euro region, saying he’ll refocus the economy on growth if he wins. The euro zone’s economy is forecast to contract 0.4 percent this year.

“Some of the Hollande comments have really had an impact,” said Mary Nicola, a currency strategist at BNP Paribas SA in New York. “The candidates have a week to go and elections are tight. It’s still a nervous point for investors.”

To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net

 

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post #2 of 11

I think this is just lip service, good for 2-3 days until reality sets in again.

 

The best form of QE3 is the kind he does not even have to do, rather, all he has to do is talk about it and get the same effect.

 

Traders will catch onto this trick soon enough.

 

post #3 of 11
Thread Starter 

I agree with you.

I'm pretty sure things will be pretty bad for more QE so soon.

Seemed to take forever before initially lowering rates to near 0.

I think it was right after Crammer's tirade, before they acted.

 

What I cannot figure is why does the Dollar value keep going down?

What the FED is really up to, I can only guess, but the result seems to be the constant devaluation of the US Dollar.

I'm going to keep my bullish sentiment until I see that change.

or

TLT gets low 100's down to low 90's and I have sold all my longs,

and have timed it just perfectly by transferring that all to TLT(among others),

before the rug gets pulled.

cb.jpeg

Quote:
Originally Posted by StockJock-e View Post

I think this is just lip service, good for 2-3 days until reality sets in again.

 

The best form of QE3 is the kind he does not even have to do, rather, all he has to do is talk about it and get the same effect.

 

Traders will catch onto this trick soon enough.

 

 

Thats my tall order, wish listlaughing.gif

post #4 of 11

 

Quote:
Originally Posted by marcosx3x View Post

cb.jpeg

 

 

 

Frikin nailed it with that picture!

 

Bravo! laughing.gif

post #5 of 11

honestly, I was bullish from october till that real bad jobs data came out.  Now europe is blowing up on top of that.  I don't know how I can switch back to being bullish here. The way people reacted today you would've thought he literally said 'I'm doing QE3 tomorrow'.  I think SJE is right here it's just lip service.  A quick injection in the arm for now and it fades (who knows).  I'm still holding some SPY puts and taking it on the chin but let's see what these jobless claims are like and GDP number on friday.  If the GDP is a beat then it's time to respect the move back up..

 

 

post #6 of 11

qe3 or something of the likes coming out late summer/early fall imo.. aapl & fb will keep the markets propped up for that long

 

until then i wish ben would stfu so i can make some money shorting something... but since he won't, i'm just gonna continue staying bullish.

 

f every country in europe slumping into a depression & the obvious u.s.a. fundamental problems. long aapl.

post #7 of 11

please QE3...this will revive my portfolio as I am heavy in PM..

post #8 of 11

 

Quote:
Originally Posted by waddy41 View Post

please QE3...this will revive my portfolio as I am heavy in PM..

 

Probably 3/4 of the world population all sitting with gold in their portfolios... not much happening for the last 6months.

 

chart.ashx?t=GLD&ty=c&ta=1&p=d&s=l

post #9 of 11

so i dunno how people are saying more stimulus.. when thats reliant on europe going in the toilet.. More so in the initial release it said none will be coming, and then in his press conference he says otherwise.. Doesnt seem to clear to me and just to qwell a initial reaction by the market to sell off.

post #10 of 11

ben always does this...

 

hints at QE, then a few days later he reverses his statement.. today was at least the 4th time this year

 

bait&switch bait&switch bait&switch bait&switch bait&switch bait&switch bait&switch

rinse and repeat

post #11 of 11
Thread Starter 

I see Triangleslaughing.gif

dxy.png

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