Awaiting Bernanke's Latest Speech

Apprehension about a speech in the Asian session from Ben Bernanke following Friday's disappointing US jobs report and the potential for further BOJ easing triggered dollar and yen selling in holiday-thinned US trading. The moves erased the "risk off" trades at the weekly open and left GBP and EUR as the day's top performers.

Non-farm payrolls and Chinese CPI remained in the spotlight in early trading but chatter about dovishness from Bernanke and/or the BOJ led to slump in the dollar and yen. EUR/USD edged below 1.3050 and then climbed up to 1.3135. EUR/JPY rose a full cent from the lows to 1.0720.

A Reuters survey of primary dealers revealed that 11 of 15 still believe the Fed will embark on QE3 with June as the likely target date. At 7:15 p.m. ET, Bernanke speaks for the first time since non-farm payrolls. Blatant hints about QE3 are unlikely but he could take small further steps toward more easing.

About 4 hours later, the Bank of Japan will make its latest policy announcement. Economists do not believe they will add to the QE announced last month but nothing can be ruled out. A hint at more easing may be enough to keep USD/JPY from falling below 81. Monday's announcement of 10,000 job cuts at Sony may have been timed to send a strong message about the difficulty of manufacturing with a strong yen.

Other events on the calendar include a speech from the BOE's Adam Posen, Chinese trade balance and Australia's NAB business confidence.

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