Hirose News|September 3, 2012 10:11 AM

FX Weekly Update




Bernanke indicated that progress in reducing US unemployment was too slow and the Fed would act as required to strengthen the economic recovery; this led to investor expectations for QE3 and reacted by selling the USD/JPY. However, as the details of QE3 haven't been mentioned at all, the pair closed at 78.39 last week. The words "would act as needed" means it is always possible to implement QE3 no matter how good the economic indexes, but that is a hackneyed expression. Therefore, it may be unlikely that QE3 will be implemented immediately as economic indexes are not going down.



Expected Range: 77.80-79.20   Buy the dollar on rallies






Ben Bernanke's speech to the Federal Reserve Board led to a fall in the dollar to 1.2637 against the euro, but Greek the problem remains an obstacle. "Chance of euro zone collapse is 50-50" said the Slovak PM (that's confidence for you!!). Buying the euro is becoming risky, and it is better to take profit ASAP. There is still a significant amount of net short Euro positions in the market, but from a technical point it looks like a positive trend is appearing, and may have futher to climb; it broke the high limit of daily Ichimoku cloud, and is trying to break through 90 days MA.



Expected Range: 1.2425-1.2750   Buy theuro on rallies

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