USD Suffers from Bernanke Rhetoric

The US dollar fell today against all most-traded currencies after Federal Reserve Chairman Ben S. Bernanke suggested that the Fed is ready to continue the quantitative easing if necessity for more stimulus would arise.

Bernanke spoke today on the Semiannual Monetary Policy Report to the Congress, saying:

On the one hand, the possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support.

He also indicated another possibility:

On the other hand, the economy could evolve in a way that would warrant a move toward less-accommodative policy.

The dollar reacted negatively to this speech and to the surge of risk appetite after China’s positive macroeconomic data. The greenback posted the biggest drop in six months against the euro.

EUR/USD jumped from 1.3974 to 1.4157 today as of 20:59 GMT, posting the biggest advance since January 13. USD/JPY dropped from 79.23 to 79.00 and USD/CHF slumped from 0.8303 to 0.8178.

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