FX round-up: Bernanke´s comments weaken the greenback
Mon 03 Sep 2012
LONDON (SHARECAST) - Although the initial reaction by many to Fed Chairman Ben S.Bernanke´s speech at Jackson Hole was that no clear signal of further quantitative easing had been forthcoming, markets soon reached exactly the opposite conclusion.
In fact, some well-known observers believe that Bernanke has now left the door open to a further dose of bond purchases in September.
Nevertheless, it must be noted that at least a handful of members of the Federal Reserve Board expressed their opposition –or skepticism at best- to such a move. Similarly, quite a few members of the political establishment, primarily from within the Republican party, also seem to be against a so-called QE 3.
Be that as it may, the Dollar Index fell to near a three month low, declining 0.5% to 81.250.
As might have been expected, both the Mexican peso and the Swedish Krona gained versus the dollar; they are the best performers so far in 2012 versus the US unit.
On this occasion, however, they were joined by the Brazilian real, which appreciated 0.9% to 2.0308 per dollar, the biggest one-day gain since August 3. So far in 2012 the South American giant´s currency is the worst performer against the greenback in 2012.
To be had in account, it was revealed on Friday that the country´s second quarter gross domestic product rose at a 0.4% quarter-on-quarter clip, just below the 0.5% forecast by the consensus but above last quarter´s rise of 0.1%. This as analysts have been moving to price-in an end to the rate-reduction cycle by the country´s central bank.
Lastly, the Colombian government has bought $800m as it pursues a program of currency intervention, parallel to the central bank’s to weaken the peso and help the country’s exporters, according to a Bloomberg report, which is expected to continue.