As markets recover from “Bernanke Euphoria” traders are pushing to the US dollar to recover and is trading at 82.98 this morning. Federal Reserve Chairman Ben Bernanke said on Wednesday the U.S. central bank would continue to pursue an accommodative monetary policy as inflation remained low and the unemployment rate might be understating the weakness of the labor market.
European shares closed higher on Thursday following dovish comments from U.S. Federal Reserve Chairman Ben Bernanke, and renewed optimism on the economic outlook in Japan and China. US Stocks roared higher to finish near their best levels Thursday, with the Dow and S&P 500 closing at record highs. The euro recovered over 200 points to trade at 1.3087
Federal Reserve Chairman Ben S. Bernanke called for maintaining accommodation even as the minutes of policy makers’ June meeting showed them debating whether to stop bond buying by the Fed in 2013.
The number of Americans filing for unemployment benefits unexpectedly increased to a two-month high last week. Swings in jobless applications are typical in July as auto plants close for annual retooling. First-time claims rose by 16,000 to 360,000 in the week ended July 6 from a revised 344,000.
Consumer sentiment climbed for a fourth straight week, reaching the highest level in more than five years as Americans grew more upbeat about their finances. Australia’s unemployment rate rose to the highest since 2009, underscoring the challenge newly-installed Prime Minister Kevin Rudd faces as he crafts a re-election pitch centered on economic management. The Australian dollar tumbled this morning after comments from China saying that their growth my only hit 6.5% this year.
Europe’s industrial production is also likely to turn out negative for the economy, which should pressurize the euro. Later in the day the US will release its producer price index and Michigan confidence data which are expected to improve and may support the dollar. Germany’s wholesale price index remained weak.
The Japanese yen is trading at 99.04 dipping a few points today after comments from Bank of Japan Kudora. Mr. Kuroda said recent economic indicators were clearly pointing to a recovery, adding that it was being fueled by improvements in key components–exports, corporate sentiment and profits, as well as growth in consumption. He said the weak yen was benefiting exports, while better business conditions were resulting in more spending. “Among firms, a virtuous cycle between income and spending is expected to gradually start working.”
The policy board decided unanimously to leave policy unchanged, and Mr. Kuroda strongly indicated that with the economy and prices moving in line with the BOJ’s expectations, the bank was not considering any additional steps in the near term. “All necessary and adequate measures are in place to hit 2% inflation target in about two years, although it may become necessary to make adjustments to both upside and downside risks in the future.”