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Forex pairs in this Article » EUR/USD (London) - Equity markets yesterday ran out of steam after strong risk on rallies carrying over from last week. The Hang Seng and Shanghai were exceptions, buoyed by Chinese monetary reform expectations, climbing 0.33 percent and 0.53 percent respectively.

The dollar fell again last night, with pressure continuing into the Asian session on Ben Bernanke’s comments to economists in Washington.

The Fed chairman said that while there had been “meaningful improvement” in the labour market, a “preponderance of data” would be needed before the Fed moved to pare back its support.

The comments follow New York Fed chairman William Dudley’s dovish comments on Monday, as well as Janet Yellen’s testimony before the US Senate last week where she spoke at a confirmation hearing ahead of taking over the Fed chairmanship on 31 January.

The cautious Fed stance and expectations of a delayed tapering of the Fed’s USD85bn a month asset purchase programme will likely be reinforced today when retail sales and existing home sales numbers are published. The numbers follow what is likely to be a subdued October CPI report with consensus estimates for no change month-on-month, bringing the annual inflation to a meagre 1 percent.

EUR/USD currently stands at USD1.3533.

The release of the Bank of England should be a non-event, with any information of substance communicated at last week’s Inflation Report. Any focus will be on talk surrounding the 7 percent unemployment threshold at which the BoE will consider hiking rates.
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