FX Highlights

  • USD stabilized in Tuesday's trade supported by hawkish comments from Fed Chairman Bernanke, Bernanke said that at some point interest rates will have to rise to combat inflation risk and that the Fed has plenty of tools to raise borrowing costs when the economy recovers, GBP was pressured by report the UK June budget deficit expanded the most on record, RBA is upbeat about the Australian economic outlook, focus turns to today's testimony by Bernanke before the House Finance Committee and the BOC policy meeting policy
  • In today's Wall Street Journal Fed Chairman Bernanke outlined a strategy to reverse money growth and contain inflation, according to Bernanke the Fed will hike rates before the Fed reverses quantitative ease
  • BOJ minutes for the June 15th/16th policy meeting state that one of the board members says the BOJ must discuss an exit strategy from quantitative ease, other members expressed concern about the outlook for jobs and wages in Japan, JPY lower
  • RBA minutes state that current policy is consistent with sustainable growth, room to cut rates if needed, economic activity not as weak as expected, Australia's June new auto sales rise 5.7%, AUD higher
  • UK June public sector borrowing rises to 18.908 bln from 11.377 bln, BOE's Bean says interest rates will not stay low for long and BOE plans to rise rates as quickly as it can when the recovery is sustainable, Bean went on to say that the weaker GBP should help boost exports, GBP lower
  • Swiss National Bank raised its foreign currency reserve holdings to the highest level in 12 years to try and weaken the CHF, CHF flat
  • The VIX index rose Monday despite stronger equity markets, this could be a sign that risk appetite remains uncertain
  • Atlanta's Fed‘s Lockhart says that an exit strategy from quantitative ease is not needed for some time because the economic recovery will be slow, risk of rising and falling prices balanced
  • US equity markets set to open mixed, European equities higher, Nikkei closed 257 points higher

Upcoming Events

  • US- Tuesday, no major data is scheduled for release today, Bernanke testifies before Congress
  • CAN- Tuesday, BOC policy meeting, no policy change is expected