Thursday, 26 Aug 2010

Safe Havens Higher Prior to Bernanke's Speech

Volatility was high today as equity markets sank and safe haven currencies rose.

As traders prepare for tomorrow's busy news day, the US dollar was even versus the euro, trading near the opening price for the day at 1.2715. The EUR/USD reached a high of 1.2763 earlier today following the release of better than expected weekly unemployment claims. For the previous week, 473K new unemployment applications were filed. Expectations were for 488K.

Despite the better than expected unemployment data, the Dow Jones Industrials Average was trading lower by 0.72%.

The Japanese yen was stronger versus the dollar, continuing the strengthening of the yen. The USD/JPY fell to 84.44, from an opening day price of 84.76. Traders are looking for the Bank of Japan to announce steps to intervene in the currency markets in order to weaken the yen.

The Fed should provide some news tomorrow for traders. Fed Chairman Ben Bernanke is scheduled to speak regarding the US monetary policy summit that is currently taking place in Jackson Hole Wyoming. Also on tap is US preliminary Q2 GDP. Economists forecast GDP to come in at 1.5%. A stronger reading may hurt the dollar and boost riskier currencies such as the euro and Aussie dollar.