This Wednesday, Ben Bernanke, the Federal Reserve chairman, gave its semiannual Monetary Policy Report to the U.S. House of Representatives in Washington, D.C. The US dollar had a mixed reaction to the news since this was an uneventful speech, mostly focused on regulatory reform and transparency. That said, the Federal Reserve Chairman sounded a bit more hawkish than usual when he reaffirmed that “although the federal funds rate is likely to remain exceptionally low for an extended period, as the expansion matures, the Federal Reserve will at some point need to begin to tighten monetary conditions to prevent the development of inflationary pressures”. Bernanke also said the Federal Reserve has been gradually slowing the pace of agency mortgage-backed securities purchases in order to promote a smooth transition in markets, anticipating that these transactions will be completed by the end of March. I remain long USD/JPY, short EUR/USD and short AUD/USD. Good luck.
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