Bernanke's comments on the first day of a two-day congressional testimony in Washington boost the dollar.
- The greenback and the yen strengthened while the higher-yielding currencies fell as the Federal Reserve Chairman said he saw signs of improvement in the US economy and financial markets, but also, considerable risks led by high unemployment.
- According to Kathy Lien, director of currency research at GFT in New York, financial conditions remain stressed and despite stronger earnings, banks could face significant further losses.
- Bernanke went on to say that the Fed's monetary policy will remain focused on the economic recovery due to the continued substantial economic slack and limited inflation pressures.
- Renewed concerns over CIT's possible collapse spurred risk aversion with investors buying the US dollar and the yen.Â The company has lost $3 billion in the last eight quarters and it may post a second-quarter loss of more than $1.5 billion.Â Its current liquidity is not sufficient to repay debt maturing next month unless holders of $1 billion in floating-rate notes due Aug. 17 accept 82.5 cents on the dollar for the debt.
Currency to watch out for: EURUSD & USDJPY
- The EURUSD pivot point is at 1.4160 with a preference to enter into long positions at 1.4170.
- The USDJPY pivot point is at 93.25 with a preference to enter into long positions at 93.35.
Today's calendar and market movers:
- UK MPC Meeting Minutes
- EU Industrial New Orders month on month expected to rise to 1.9%
- US Fed Chairman Bernanke due to testify on the semi-annual monetary policy report, in Washington DC
- US stocks rose on Tuesday with the Dow up 0.8%, S&P and NASDAQ higher by 0.4%
- As of 06:15 GMT the Nikkei is at 0.7% and the Hang Seng at 0.28%