Archived IMT (2010.08.27)

BERNANKE SPOKE, MARKETS WHIPSAWED before both USD and JPY accelerated their selloff in the last half hour of London trade. Readers of the IMT were alerted of these declines before the start of the US trading session, but once Bernanke spoke, I warned my followers on twitter (twitter.com/alaidi) on the following: Accelerating selloffs in $USDX & #YEN coming up near London Close. $ EURUSD to make transition from holding 12680s to 1.2760s $FXE $$. Once again, EURUSD held up at the important 1.2680s trendline before taking off towards 1.2770s. Fed chairman Bernankes speech highlighted 2 key points; purchases of long term assets are his favourite option for additional easing; and the central bank will not breach its commitment to price stability. The preference of additional asset purchases over communicating a longer period of exceptionally low rates and reducing interest rate on reserves allow for the possibility of renewed expansion of the Feds balance sheet. I warned on twitter there was NO REASON for USD to rise when Bernanke keeps the door open for QE. Equities bottom picking ensued on better than exp GDP especially as the S&P500 neared the key 1040 low, but these gains are unlikely to extend past mid next week.