23 MAY 2013: BERNANKE TAKES USD TO NEW HIGHS
DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments
The head of the federal Reserve, FED, Ben Bernanke’s statement to Congress caused markets to fluctuate wildly yesterday. Bernanke’s comments initially had a positive impact on the stock markets when he stated that it would have unpredictable consequences for the US economy if FED’s bond buying program was terminated in the near future.
The bond buying program has boosted the US and global stock markets, but has so far failed to create new employment. FED had earlier stated that the bond buying of USD 800 billion collar will end when the unemployment has reached 6,5 %. It now stands at 7,6 %. This statement was initially seen by markets as a continuation of the bond buying that has boosted global equity markets.
At the same time Bernanke indicated that the termination of the bond buying might be on the immediate cards.. These comments were supported by the minutes from the April/May FED board meeting opening for a termination of the bond buying within the near future. This resulted in a steep fall in US stock indexes. Dow Jones fell from 16 464 down to 15 307 with equal immediate drops in S&P and Nasdaq.
The USD jumped to 103,73 Yen a Dollar. The DXY, a basket of currencies against USD, raised to a record high of 84,27, Euro/USD jumped to 1.2854 as Swiss Franc weakened both towards Dollar and Euro. The Australian dollar trades at its lowest level in a year. Precious metals have fluctuated wildly through the New York session with gold trading between USD 1369 and 1416. Silver reached USD 23,20 to fall back to 22,27. Oil prices remain steady.
Bernanke’s statement boosted global stock markets. Dow Jones immediately increased to a record high of 15 464 with equal jumps in European equities.
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