Bernanke Speech | Updates & Effects

Bernanke Speech | Updates & Effects

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The markets had mixed feelings as traders waited for the latest policy statement of the Federal Reserve. Investors were anticipating the central bank’s move to have interest rates unchanged and clarify its plans on how to reduce the Quantitative Easing (QE) program set to help the US economy recover in the first place.

The markets went crazy when initial news on tapering the stimulus plan was announced in June and July. The resulting volatile markets had traders anticipating for every meeting that monetary policy makers have, with hopes of settling the confusing statements released by the Feds.

Investors can now breathe easily. Federal Reserve Chairman Ben Bernanke said that lower inflation rates could affect economic growth. And to support it, the $85 billion a month asset purchasing program may be continued. Quite unexpectedly, he repeated that there is the need to see “further improvements” before the Feds start to taper the monetary stimulus.

FOREX
After Mr. Bernanke’s announcement, traders responded strongly and the dollar index recovered at 81.83. Over in the Euro zone, traders were also following the statement of European Central Bank (ECB) President Mario Draghi that left its interest rates unchanged at 0.5%.This has made Thursday a busy day for the EUR/USD currency pair. It finished the day at the 1.3300 level, with the coming days expected to be volatile for the pair.

The pound showed a weak performance in the past days, down by over 200 points at 1.5159. It fell against the euro as the demand to meet month-end commitments triggered a wave of buying using the single currency.

A bullish pattern can be seen in the USD/JPY pair over in the Asian session. It was seen falling to the 97.80 area after the US data came out. However, the pair rebounded as it traded up at 98.40.

Meanwhile down under, the NZD is trading at 0.7968 while the AUD is exchanging at 0.8962 for the first time this year, way below the expected 90 price level.

STOCKS
European stocks were trading higher as investors in the region were expecting the ECB to hold its interest rates during its monthly policy meeting. Over in Asia, and despite the conflicting Chinese PMI data, stocks also opened higher today. There was confusion in the HSBC PMI data printed at a forecast of 47.7 showing a contraction from the official government release at 50.1, which shows above expectation figures.

US Stocks were also trading in the positive green following Bernanke’s speech. Majority of traders decided to sell their shares for profits. Quarterly earnings for AIG, Exxon Mobil and LinkedIn will be released today, which will create great opportunities for binary options traders.

INDICES
The release of the good US Jobs Data had the S&P 500 trading high today. Currently, it has broken the 1700 resistance level and is expected to see an upward movement for the duration of the trading day.

The market also got its needed boost with the release of good US manufacturing data. The Dow Jones Industrial Average has broken its resistance level at 15600 with traders anticipating a steady climb.

COMMODITIES
US Crude Oil inventories increased by 0.431 M, which was more than what was expected of a 2.306 M decrease. It traded up with prices reaching $105.50 per barrel. Traders are encouraged to stay long and consider short-term price movements. There’s a prevailing bullish sentiment when it comes to crude oil investing in binary options today.

After the release of the US GDP data, the price of gold fell farther below $1,310.00 per ounce. After Chairman Bernanke announced that the monetary stimulus plan will remain unchanged, gold climbed by more than $20 an ounce and wastrading above $1,330.00/ounce. However, it was only for a while and during the Asian session, gold prices were seen plunging and returned to trading below $1,320.00/ounce.