Wednesday, 9 Feb 2011

Dollar Falls Broadly on Fed's Comments

The dollar fell against most of its major currency counterparts on Wednesday after Federal Reserve Chairman Ben Bernanke said U.S. unemployment remained too high, suggesting the Fed would push on with its $600 billion stimulus program. The Dollar is currently trading lower against the EUR by nearly 80 pips at 1.3725. It is also trading lower against the JPY and GBP, as investors remain wary of making big bets in favor of the Dollar these days.

Some analysts hoped that given broadening signs of a U.S. recovery, Bernanke would drop hints that the Fed would end its bond-buying program sooner than expected. Instead he repeated concerns about high unemployment, ensuring the Fed's quantitative easing will remain in place and fueling dollar selling.

Tomorrow, forex traders cannot afford to overlook a batch of data that is expected from the leading economies. Both the British Official Bank Rate and U.S Unemployment Claims will be released at 12:00 GMT and 13:30 GMT respectively, promising an extremely volatile trading day. Traders should take advantage of this unique opportunity and use the volatile market in order to capitalize profits.