Another Push on The Dollar

In the post-Bernanke market, the dollar has fallen to new lows for the session against all of the majors. what did Bernanke say that was so dollar negative? Nothing. The market was not convinced that he will make his concern or monitoring of the dollar with action. Indeed, Bernanke played this down the inflationary significance of the dollar's decline by putting the decline in the context of the big run up in H2 08 and Q1 09. Moreover, by noting that he did not see bubbles in the US presently also provided dollar bears with fresh fodder.

But he is not alone. Dallas Fed President Fisher reiterated comments from earlier this month when he noted that the dollar's decline has been gradual--not disorderly, which also removes a potential justification of raising the dollar's importance in the policy making equation.

Bernanke and Fisher's comments seem in stark contrast to comments from HK, China and Malaysia from the APEC meeting which expressed concern that the low Fed funds and declining dollar are fueling the asset bubbles.

Just like the S&P 500 has struggled to close above the 1100 level, the euro has not closed above the $1.50 level since Oct 21-23 period. Today could prove the exception on both. Sterling is set for its best close since early Aug. The dollar is flirting with this year's low against the Swiss franc which was set on Oct 23 near CHF1.0034. Stops are thought to lie below par. The dollar is set to finish the North American session at its lowest level against the yen since early Oct.