Bernanke says US not ready to quit QE – yet
11 July, 2013
The US Dollar has weakened overnight, as Federal Reserve Chairman, Ben Bernanke, said in his speech yesterday that the FOMC (which sets US monetary policy) want to see more evidence of economic recovery before their asset purchase scheme is wound down. This is in contrast to last month’s comments, which had led analysts to believe that QE would end in the States before in Europe. Since QE tends to weaken a currency, yesterday’s softening of American policy has sent the US Dollar cheaper, with the rate for holders of sterling to buy Dollars shooting up 1.5c during yesterday evening.
The improvement in rates is of course reflected in pegged currencies such as the UAE Dirham, and presents an opportunity to secure better rates for those of you who have been holding out before sending money abroad.
There was no such respite for anybody waiting for an improvement before buying Euros. The single currency spent yesterday maintaining its higher value, and in fact rates for buying Euros using Pounds drifted slowly lower during the day, without any immediate signs of improvement. This comes despite renewed worries about Eurozone bailouts, showing that the Euro is more resilient than it was at the turn of the year. Today at 9am UK time we do have the European Central Bank monthly report, which could influence EUR exchange rates – in either direction depending on the content and latest figures and forecasts.
Elsewhere today there is little of interest due out, except Canadian house prices at 1.30pm.
For the Pound then, we do not expect any significant improvement this week, with markets perhaps beginning to focus on the all important Bank of England minutes, released next week which will be the first under Mark Carney’s leadership.
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