Euro and stocks rise after Bernanke's speech
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EUR/USD
FXstreet.com (Córdoba) - The euro reached a fresh 8-week high and stocks rose sharply on Friday after Fed's Chairman Bernanke said stagnation in the US labor market was a 'grave concern' and that the central banks was open to using more quantitative easing as needed, but refrained from announcing any specific or imminent decision.
Even though Bernanke left the door opened for further monetary stimulus, he didn't give the strong signal that market was expecting. The US dollar strengthened as a knee-jerk reaction but quickly resumed its decline against major competitors, while US and European stocks rallied.
"In short, nothing new has been said", says Rob Carnell, analyst at ING Bank. "There is clearly no unanimity for more QE or any other sort of substantive policy action at the September 13 meeting, and though we believe consensus for action exists, it will need some support from the data. Here, next, week's payrolls will be pivotal".
"QE3 is still on the table despite no clear hints were vented out. Market is unsure on how to take the news, as dollar geared higher, yet unable to follow through", said Valeria Bednaik, chief analyst at FXstreet.com.
In Wall Street, the Dow Jones rose 1.0 %, the Nasdaq gained 0.8% while the S&P 500 was up 0.8%. In Europe, the Stoxx Europe 600 climbed 0.6%.
EURUSD reached a high of 1.2636 after the speech, last seen Jul 2, although the pair pulled back afterward and was last up 0.6% at the 1.2585 area, where the 100-day SMA lies.
The shared currency had already rallied during the European session, supported by comments from European Central Bank board member Benoit Coeure that reiterated the ECB's commitment to preserve the euro currency.
Also lending supports to the euro were rumors that Bundesbank's Chief Weidmann could resign due to the disagreement over ECB's bond purchase program, which fueled expectations the ECB will buy peripheral debt to cap yields and tackle the euro zone crisis. Weidmann declined to comment on the news.
Gold futures climbed 1.3% to $1,679 an ounce, while crude-oil futures rose 1.7% to $96.24 a barrel. Yields on benchmark 10-year Treasury bonds fell to 1.60% as demand rose.
Even though Bernanke left the door opened for further monetary stimulus, he didn't give the strong signal that market was expecting. The US dollar strengthened as a knee-jerk reaction but quickly resumed its decline against major competitors, while US and European stocks rallied.
"In short, nothing new has been said", says Rob Carnell, analyst at ING Bank. "There is clearly no unanimity for more QE or any other sort of substantive policy action at the September 13 meeting, and though we believe consensus for action exists, it will need some support from the data. Here, next, week's payrolls will be pivotal".
"QE3 is still on the table despite no clear hints were vented out. Market is unsure on how to take the news, as dollar geared higher, yet unable to follow through", said Valeria Bednaik, chief analyst at FXstreet.com.
In Wall Street, the Dow Jones rose 1.0 %, the Nasdaq gained 0.8% while the S&P 500 was up 0.8%. In Europe, the Stoxx Europe 600 climbed 0.6%.
EURUSD reached a high of 1.2636 after the speech, last seen Jul 2, although the pair pulled back afterward and was last up 0.6% at the 1.2585 area, where the 100-day SMA lies.
The shared currency had already rallied during the European session, supported by comments from European Central Bank board member Benoit Coeure that reiterated the ECB's commitment to preserve the euro currency.
Also lending supports to the euro were rumors that Bundesbank's Chief Weidmann could resign due to the disagreement over ECB's bond purchase program, which fueled expectations the ECB will buy peripheral debt to cap yields and tackle the euro zone crisis. Weidmann declined to comment on the news.
Gold futures climbed 1.3% to $1,679 an ounce, while crude-oil futures rose 1.7% to $96.24 a barrel. Yields on benchmark 10-year Treasury bonds fell to 1.60% as demand rose.
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