The dollar eased slightly following Fed Chairman Bernanke's speech, relinquishing some of its gains from Friday's sharply better than expected US jobs report. The economic calendar at the start of the week was light with markets looking ahead to Fed Chairman Bernanke's speech. The US equity bourses were little changed on the session, up marginally by afternoon trading.
Fed Chairman Bernanke stated that the FOMC is still looking an extended period for low rates, although it will want to factor in some recent signs of strength in its policy deliberations. Nonetheless, the economic is unlikely to see a vigorous snapback in growth in 2010 and the economy has some way to go before they can be sure the economic recovery is self-sustaining. Bernanke said the best guess is for modest growth in 2010, which will be enough to lower the unemployment rate but if the economy encounters formidable obstacles, the jobless rate would decline lower than preferred. He expects high unemployment and stable expectations to keep inflation subdued, with a possibility for it to move lower.
The greenback slipped toward 1.49-level against the euro and 1.65-handle versus the pound following Bernanke's speech. The calendar for the week ahead will shift focus from last week's payrolls report to November retail sales, PPI, trade balance, business inventories and the University of Michigan consumer sentiment survey.
Euro Edges Up
The euro crept up higher against the dollar following Bernanke's speech, stabilizing just shy of the 1.49-mark. The economic data released overnight saw the October sentiment index deteriorate by more than expected, missing expectations for an improvement to -4.7, instead coming in at -5.5 from -7.0 in the previous month. Meanwhile, Germany's industrial orders in October also missed estimates falling by 2.1% from a 0.9% increase in September.
EURUSD trades near the 1.49-level, with interim resistance seen at 1.4930, followed by 1.4965 and 1.50. Subsequent ceilings are seen at 1.5040, backed by 1.5070 and 1.51. On the downside, support is seen at 1.4860, followed by 1.4830 and 1.48. Additional floors are eyed at 1.4760, followed by 1.4725 and 1.47.