Bernanke & Trichet

The Dollar was being sold off after Bernanke's comments yesterday. The interpretation is that 2008 outlook had worsened. We may see the U.S cut the rate by 50 bp. Bernanke hardly spoke about inflation, he concentrated mainly on growth.

The Euro strengthened after Trichet's comments. The interpretation is the ECB will do what is necessary to contain inflation. Trichet spoke of inflation and growth.

The Fed implied problems in the U.S economy are getting worse. Trichet was very hawkish and implied a different direction for the Euro zone and the key to that was combatting inflation. This gave analysts a trading opportunity and so the Dollar starting selling off.

From what we have heard we should expect to see rate cuts and further weakness with the Dollar. That is the fundamentals so the technicals now have to back up the fundamentals. We will wait for the weekend for analysis on the majors and update the site with our results next week.

Have a great weekend.

Forex Analysts

Anne Chapman & Javid Shaik