The US Dollar is mixed this morning after the nonevent that was Fed Chairman Bernanke's bland speech at a global central banker summit in Jackson Hole, WY. Early in the week, investors believed that Bernanke would announce another round of economic stimulus after last week's struggles on Wall Street and worsening economic data. However, with inflationary pressures still elevated, the Fed's options are limited in terms of a sizeable increase in liquidity. Moreover, having pledged to keep interest rates low at least until 2013, and with Treasuries showing no signs of spiking higher despite the downgrade of the US's sovereign debt rating, Bernanke has said for months now that he's not planning another round of quantitative easing, at least for the time being. Moreover, with three Fed members abstaining from last month's monetary policy vote, it doesn't even appear the Fed chief would have the influence to pass another round of easing through the FOMC. GDP data released this morning was slightly worse than expected, coming in at 1.0% versus last month's 1.3% and the 1.1% expected. University of Michigan confidence also registered marginally worse than expected at 55.7 versus 55.8, but it is up from last month's reading of 54.9. With Bernanke's non-announcement, the dollar appears to be relegated to its recent ranges as investors begin to gauge the economy's growth prospects rather than guess at the Fed's direction.

The EUR is back to relatively flat after swinging in a 100pt range in the lead up and immediately after Bernanke's Jackson Hole speech. The Eurozone's struggles with debt have fallen largely out of the spotlight as of late with Fed policy taking center stage. However, the underlying economic problems remain and regional finance ministers are still grappling over a deal for financing Greece's second bailout package.

The GBP is relatively flat this morning despite disappointing GDP data. The British economy grew 0.2% in Q2 as services and manufacturing both showed signs of losing momentum. The economy has barely expanded in the past year, with the annualized reading of GDP posting a mere 0.7%. Slow growth combined with government austerity measures and persistently high inflation has taken its toll on British consumers' purchasing power. The ongoing debt crisis in the Eurozone, the main destination for British exports, and slow growth in the US have also weighed on the British economy.

The JPY traded in a one percent range overnight as volatility increases in the wake of Japanese PM Nato Kan's resignation. Kan had little option after key bills on deficit financing and energy subsidies were passed in the Diet today, and the move was largely expected. Both former and present ministers alike are lining up to replace Kan come Monday's election. The new PM will be the sixth in the past five years, reinforcing Moody's decision to downgrade Japan's credit rating earlier this week after they cited the country's political revolving door as a primary reason for the cut. However, none of the candidates represent a sharp departure from current policies, and as such, once the dust settles, Kan's resignation will likely have little impact on the yen's long-term direction.

The Commodity Currencies are sharply higher this morning despite weaker oil and copper prices and signs of slowing growth in the world's largest economies. Oil was down by a half percent to $84.95/bbl, copper fell to $406/lb, but gold pushed higher by more than a percent to $1781/oz. The AUD jumped to a two-week high early this morning after RBA Governor Glenn Stevens told reporters that inflation bears careful watching, but [the RBA] can keep it under control, significantly reducing speculation that the central bank will cut interest rates before the end of the year. Just last week, futures had more than 150bps of interest rate cuts priced in over the next 12 months, but those numbers have since pulled back to 120bps. The CAD is up this morning following an improved outlook for the US economy, Canada's main trading partner, from Fed Chairman Bernanke. The NZD and ZAR both also posted strong gains overnight on increased bets that their respective central banks will look to tighten monetary policy before the end of the year as inflation pressures gain.


































10-Year Treasury Yield:





 $ 21.40



 $ (1.45)

Crude Oil: 

 $ 84.68

 $ (0.68)





This market summary is prepared by Union Bank's Global FX Department for the general information of its customers. It is based on the most accurate information currently available, but should not be considered investment advice or a guarantee of future exchange rates or trends..