Bernanke's Cautiousness Punishes USD, Updated EURUSD Premium Trades

Fed Chair Bernanke started the week by questioning the strength of the recovery. The euro was the top performer while the yen lagged. Asia-Pacific trading does not feature any notable releases. EURUSD, AUDUSD, USDCAD are among our Mondays Premium Intermarket Insights.

The US dollar stumbled after Bernanke said the improvement in jobs was somewhat out of synch with the slow-moving recovery. He said further progress may be slow. The tone of the speech reflected skepticism about the economy and willingness to take further action.

The dollar immediately fell after the comments, and gold rebounded to nearly $1700. EUR/USD eventually climbed to the highest levels since February. Stocks cheered the comments, with the S&P 500 hitting the highest since 2008.

Adding to optimism were German endorsements on allowing the EFSF and ESM to run parallel, effectively boosting the European firewall. Draghi also said he continues to see improvements in the eurozone.

Economic data was minimal. The lone US report was pending home sales, which fell 0.5% compared to the +1.0% expected.

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