In what appeared to be a largely risk-neutral session with a downside bias, the US dollar was mostly stronger against major counterparts overnight in a session which lacked a key directive in the absence of economic data. However, Fed Chairman Ben Bernanke once again commanded the spotlight, this time in the form of a Television interview with 60 minutes. In the interview, Bernanke appeared to have painted a rather bleak outlook on the jobs front; just days after the US unemployment rate rose another step closer to the dreaded 10 per cent level. He did however defend the need for economic stimulus in the form of quantitative easing and stated it's certainly possible when asked if the US economy may see another round of stimulus. Despite Bernanke's belief that inflation fears are way overstated, It appears markets have focused on the possibility of further economic stimulus with traditional inflation safe guards such has Gold and Silver gaining the upper hand over the session. Gold's eyeing all-time highs and silver shined the brightest rising through US$30 an ounce. To explore why Silver has outperformed its wealthier cousin can produce a wide range of conflicting analysis, but undoubtedly it's a cheaper alternative as a hedge against the current inflation-sensitive environment, and arguably remains undervalued in comparison relative to previous ratios. Silver is also seen to have more productive qualities than gold, given supply is being used in industry and remains an important part in new technology, medical and industrial uses.
Meanwhile, the Aussie dollar enjoyed a mild recovery overnight after retreating to lows of 98.48 US cents late yesterday. The RBA will today reconvene for the final time in 2010 in what is expected to see local interest rates remain steady at 4.75 percent, however the key directive will no doubt be in the finer points of the post decision statement. Recently the local unit took a south-bound turn as RBA Governor Glenn Stevens provided a rather neutral tone on the interest rate outlook in a testimony to a parliamentary committee. Governor Stevens defended the central bank's decision to pre-empt to curve in November's rate hike, and now believes current interest rates to be an appropriate setting of policy for the period ahead which may not see further tightening come until the middle of next year and maybe a little bit more after that. So in essence, the market is more than prepared for more of the same neutral tone from the RBA, however since this time the local economy has produced lackluster readings on GDP and retail sales amongst other things which may find the RBA a tad more dovish than that of previous meetings. At the time of writing the local unit is buying 99 US cents.