The dollar declined to approach the currency basket on Monday as investors found in the Friday speech of FRS chairman Ben Bernanke the signals of further stimulation of the US economy that has been sluggish which made many rush to risk. "The fact that Bernanke did not talk about inflation risk has helped equity markets and put pressure on the dollar," said Manuel Olivieri, currency strategist at UBS in Zurich. "But there is not much more potential for the dollar to sell-off with markets now focusing on FOMC minutes and the U.S. employment report this week," he added. Moreover, even though Ben Bernanke did not comment on what measures the Federal Reserve System will take to support the US economy that grew in the second quarter by 1% after a gain of 0.4% in the first quarter, FRS head said that the September meeting of the regulator will take two days, not one.
Investors were enthusiastic about this news: it sent the American stocks up during the evening trading session on Friday. Monday morning the Asian stock markets grew as well, just like the European ones, despite low-volume trading owing to a non-working day in Great Britain. The yen remained stable during the Asian session on Monday even when it was announced that Japan’s Finance minister Yoshihiko Noda won the ruling party presidential elections. Noda is well-experienced in interventions. In fact this victory guarantees him the office of the national leader. As dealers say, the yen may well continue growing this week, since concerns over the US economic conditions keep demand for the yen high, as the yen is now regarded as a shelter-currency. The data from Chicago burse shows that hedge funds and other non-commercial investors left their yen rates on week ending on August 23. The volume of long positions on the yen has increased by 12% since the last intervention was carried out on August 4. Dealers suppose, that the victory of Noda guaranteeing him the office of the country’s leader is not likely to have negative effects on the yen. Investors have already seen its impact and the yen keeping strengthening.
Analysts say that in the closest time nothing is likely to be of crucial importance, not even a new package of measures announced by Noda on Wednesday aimed at creation of a USD 100 bln. fund to stimulate investments of foreign companies or new rules requiring financial companies to reveal their currency positions.