All eyes on Bernanke testimony today
City Index July 17, 2013 1:39 PM
<p>The FX markets consolidated in Asia ahead of the all-important Bernanke Testimony to Congress today and tomorrow, where the markets are hoping that the Fed […]</p>
The FX markets consolidated in Asia ahead of the all-important Bernanke Testimony to Congress today and tomorrow, where the markets are hoping that the Fed Chairman will clarify when tapering will begin on its $85 billion a month bond buying programme. With a change to the usual schedule, a prepared transcript will be released at 1.30pm (London time) with the Chairman to take to the seat at 3pm. The markets will be looking for a reiteration of last Wednesday’s comments that the US policy will be highly accommodative for the foreseeable future although let’s remember that Bernanke today has to give the entire FOMC view, not just his own dovish stance. The FOMC minutes last week revealed that half of its members believed in faster tapering than the chairman himself. It’s not going to be easy for the Chairman today but I believe he will sit on the fence, criticising the markets for over reacting whilst keeping us very much data focused. He is likely to emphasise that tapering doesn’t mean tightening and that inflation is low and unemployment remains elevated, with the tapering timetable flexible if the economy doesn’t deliver on the FOMC’s dual mandate.
The BoE minutes will be released this morning at 9.30am where will find out if incoming Governor Mark Carney voted for further QE and if the forward guidance policy will be initiated in August. The minutes will also indicate whether this is going to be based on unemployment like the Fed or growth focused.
We do have some data releases today in the form of the UK jobs report this morning and housing starts from across the pond, whilst at 3pm (London time) there will be a policy announcement from Canada but all of this will be secondary to the above events.
Supports 1.3020-1.2990-1.2920 | Resistance 1.3210-1.3300-1.3340
Supports 98.85-98.25-97.60 | Resistance 99.80-100.50-101.60
Supports 1.5070-1.5010-1.4960 | Resistance 1.5150-1.5190-1.5225
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