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The USD staged a solid recovery this Friday, as the USD index bounced from key trend line support that formerly served as resistance during the period of 2005 (late) – 2007. Meanwhile, Fed Chairman Ben Bernanke talked about financial stability at the Kansas City Fed's annual Jackson Hole conference. he didn't really said anything new or pointed any major points, however he did mentioned that "the recent decline in commodity prices, as well as the increased stability of the USD, has been encouraging. If not reversed, these developments, together with a pace of growth that is likely to fall short of potential for a time, should lead inflation to moderate later this year and next year." although, the rest of Mr. Bernanke's commentary was some sort of status quo, as he said "the inflation outlook remains highly uncertain" which does not explain anything about the future and also that the "FOMC is committed to achieving medium-term price stability and will act as necessary." Nevertheless, despite the fact that the financial health of the two US mortgage giants Fannie Mae and Freddie Mac remain a major risk in the market, Mr. Bernanke did not even talked about them. Tt seems that when it's a matter of a risky issue, Mr. Bernanke will allow US Treasury Secretary Henry Paulson to do all the "dirty" talking.
Looking ahead to next week, the USD faces heavy event risk as S&P/Case-Shiller home prices, consumer confidence, durable goods orders, and Q2 GDP revisions will all hit the wires. However, the minutes from the Federal Reserve’s August meeting may be the event to watch, especially if the commentary signals any sort of bias within the FOMC.
04:20
Posted on Aug-24-2008
