Overnight gain of dollar trimmed in thin market

[RTFX-Trading]

Fed’s chairman Ben Bernanke spoke at the Jackson Hole symposium on Friday. He noted that the Fed’s decision to keep the rates at 2% is supported by the rising value of the dollar and the falling of commodity prices. He also said that the economy has weakened from the storm in the financial sector, the price outlook is “highly uncertain” and that the Fed will take necessary steps to ensure that the prices remain stable in the future. All this gave a balanced assessment on the US economy.

The greenback gained strength overnight. EUR/USD traded from 1.4791 to a low of 1.4697. USD/JPY moved from low of 109.80 to a high of 110.28 while GBP/USD dropped to 2 years low at 1.8405. UK’s growth was reported on halt with the GDP unmoved and the fall in oil price on Friday supported the dollar’s gain across the board.

Since then, as it is a UK bank holiday, the market took the opportunity to buy in thin market and pushed the cable back to 1.8498 now which in turn trimmed the greenback’s today’s gain. But as usual the differential between US economic growth and increasing concerns on the weakness in the European economy and also lower commodity prices should continue to keep EUR/USD under pressure.