Forex Flash: Majors claw higher on Italian Bonds and Bernanke - OCBC Bank

Emmanuel Ng of OCBC Bank notes that following an unsteady start in Asia, the majors managed to scrape higher against the dollar on the back of encouraging demand at Italy’s bond auction while the JPY also under performed across the board and the SNB’s Jordan noted that the central bank is far from exiting from the policy of capping the strong CHF.

Elsewhere, he notes that Fed chairman Bernanke reiterated his message from Tuesday, displaying no inclination to tighten monetary conditions and defending the Fed’s bond buying program. Notably, he sees that Bernanke also added that there is a “significant majority” of support for the current monetary stance. Late Wednesday, the Fed’s Fisher also chimed in with similarly dovish comments. Looking towards Friday, he thinks the sequestration deadline may not elicit an duly negative reaction from the markets with the Fed still solidly standing behind its accommodative stance.

Looking ahead Ng feels that the Euro may continue to bump its head against the cloud of uncertainty surrounding the Italian political situation (with talk of another round of elections being called) with short-end riskies also deepening significantly the bias for EUR (and AUD) puts this past week. Earlier in the day, the ECB’s Draghi also indicated little urgency from the ECB to consider an exit from easy monetary conditions.