Financial markets have recently sold off on concerns that the Fed may begin to scale back its $85 billion a month bond-buying programme as soon as September.
But Bernanke's remarks, which played down the strength of last week's June payrolls report, prompted investors to reassess the risk of an early end to the Fed's programme. They cut long dollar positions and sent U.S. Treasuries prices higher.
"I was pretty shocked with this selloff this morning. Obviously, Bernanke kicked it all off, but it was a bit of a delayed reaction," said Bart Wakabayashi, head of forex at State Street Global Markets in Tokyo.
"I'm hearing there were some margin calls, stop losses triggered there, and it moved down, so it seems like it's pretty thin and maybe some Asian players were trying to unwind their dollar longs.
"But it does seem like a bit of an overreaction. Having said that, it's a bit surprising, all of a sudden, the change in the tone of Bernanke, so it's a whole new world all of a sudden."
The dollar index added 0.3 percent after dropping 1.8 percent on Wednesday - a magnitude not seen since 2008-2009 at the height of the global financial crisis.
The euro surged 1.4 percent after earlier hitting a three-week high of $1.32085. Against the yen, the dollar eased 0.3 percent after falling to a two-week low of 98.20 yen.
Commodity currencies also jumped against its U.S. peer with the Australian dollar climbing as high as $0.9300, putting further distance from a 34-month trough of $0.9036 plumbed just last week.
The Australian dollar was also aided by a surprise increase in Australian employment in June, a result that may lessen the chance of the central bank lowering interest rates further in the short-term.
But Bernanke's remarks, which played down the strength of last week's June payrolls report, prompted investors to reassess the risk of an early end to the Fed's programme. They cut long dollar positions and sent U.S. Treasuries prices higher.
"I was pretty shocked with this selloff this morning. Obviously, Bernanke kicked it all off, but it was a bit of a delayed reaction," said Bart Wakabayashi, head of forex at State Street Global Markets in Tokyo.
"I'm hearing there were some margin calls, stop losses triggered there, and it moved down, so it seems like it's pretty thin and maybe some Asian players were trying to unwind their dollar longs.
"But it does seem like a bit of an overreaction. Having said that, it's a bit surprising, all of a sudden, the change in the tone of Bernanke, so it's a whole new world all of a sudden."
The dollar index added 0.3 percent after dropping 1.8 percent on Wednesday - a magnitude not seen since 2008-2009 at the height of the global financial crisis.
The euro surged 1.4 percent after earlier hitting a three-week high of $1.32085. Against the yen, the dollar eased 0.3 percent after falling to a two-week low of 98.20 yen.
Commodity currencies also jumped against its U.S. peer with the Australian dollar climbing as high as $0.9300, putting further distance from a 34-month trough of $0.9036 plumbed just last week.
The Australian dollar was also aided by a surprise increase in Australian employment in June, a result that may lessen the chance of the central bank lowering interest rates further in the short-term.
No comments:
Post a Comment