Forex Market Bell Rung by Ben Bernanke

The Chairman of the US Federal Reserve Bank, Ben Bernanke, rings the forex bazaar alarm at a accent he fabricated bygone at an bread-and-butter appointment in Barcelona Spain. Helicopter Ben said the following:

"In accord with our colleagues at the Treasury, we abide to anxiously adviser developments in adopted barter markets. The challenges that our abridgement has faced over the accomplished year or so accept generated some bottomward pressures on the adopted barter amount of the dollar, which accept contributed to the blackballed acceleration in acceptation prices and customer amount inflation. We are alert to the implications of changes in the amount of the dollar for aggrandizement and aggrandizement expectations and will abide to codify activity to bouncer adjoin risks to both genitalia of our bifold mandate, including the accident of abrasion in longer-term aggrandizement expectations.

Bernanke continues, "Over time, the Federal Reserve's charge to both amount adherence and best acceptable application and the basal strengths of the U.S. economy--including adjustable markets and able-bodied addition and productivity--will be key factors ensuring that the dollar charcoal a able and abiding currency."

Those of you who are continued cogwheel banal traders apparently accept heard the old adage that "they don't arena a bell" to advertise bazaar acme or cheers or cogent axis points. However in this instance Mr. Bernanke came as abutting as you will apparently anytime see of campanology a alarm to let you apperceive the the US has assuredly apparent the errors of its way in absolution the Dollar accelerate to celebrated low levels adjoin best currencies.

While one accent will not of itself about-face the Dollar about it does serve apprehension that Dollar bears had best be actual accurate with their forex positions and that Dollar beasts may be about to accretion the high hand. Adjoin the Yen the Dollar anon acquired about 125 pips on Bernanke's comments and the Euro gave up about 100 pips fast. Actual fast.

Today the Dollar has accustomed aback some of yesterday's assets as forex traders mull over Bernanke's comments. However, the Dollar looks like it is accumulation and will anon added higher. The big question, of course, is will the Fed stick to its boldness should added bad bread-and-butter abstracts abide to be appear every month? Should the Fed alpha to accession ante to advice strengthen the Dollar that activity would acceptable arena addition alarm for the banal market. With the banal bazaar already bendable college absorption ante could accelerate it South in a hurry.

Mr. Bernanke and the Fed are in a no win situation. Lower ante will acceleration up the Dollars abatement and college ante will apparently catchbasin the banal bazaar and add to the apartment market's woes. However, with aggrandizement zooming to the upside the forex bazaar will, at atomic for now, acceptable accept to the alarm campanology by Mr. Bernanke and calculation on a bit of aggrandizement angry by the Fed as it attempts to strengthen the Dollar.

Conclusion: The Fed is acceptable aflutter of an aggrandizement tiger that it will not be able to control. It looks like it is accessible to accident agreement added burden on the US abridgement by demography accomplish to action inflation. The quickest way to do this is by adopting ante and allowance the Dollar to strengthen. Look for a stronger Dollar activity to alpha blame in over the abutting few days.