Watch out for Bernanke
Last week Ben Bernanke said that US economy still needs stimulus. Earlier the central banker pointed out that the Fed may start reducing stimulus this year. As the Chairman is scheduled to testify to the Congress tomorrow many worry what he will say this time.
According to the latest FOMC minutes, “about half” of participants indicated “it likely would be appropriate” to end the bond purchases late this year. It seems that the Fed is divided and doesn’t know which course to take. Mixed economic data coming from the US doesn’t help here.
Rabobank International: “Bernanke was dovish last week and so the chances are that he repeats some of that rhetoric about accommodation. The market is positioning itself for a dovish Bernanke tomorrow so the dollar therefore is on the defensive. The euro is seeing some benefit from that.” At the same time, “if he (Bernanke) seems more or less satisfied with how things are going then that would be taken as an indication that we are going to see something in September.”