In collaboration with our colleagues at the Treasury, we continue to carefully monitor developments in foreign exchange markets. The challenges that our economy has faced over the past year or so have generated some downward pressures on the foreign exchange value of the dollar, which have contributed to the unwelcome rise in import prices and consumer price inflation. We are attentive to the implications of changes in the value of the dollar for inflation and inflation expectations and will continue to formulate policy to guard against risks to both parts of our dual mandate, including the risk of an erosion in longer-term inflation expectations.
– Fed Chairman Ben Bernanke, “Remarks on the economic outlook”, delivered this morning at the International Monetary Conference, Barcelona, Spain
The above is the key excerpt from Fed Chairman Ben Bernanke’s market moving speech this morning at the International Monetary Conference in Barcelona, Spain.
As you can see, these remarks, that very excerpt in fact, led to a dramatic rally in the dollar versus the euro ($ Euro 2 Day Chart). They also caused a selloff in oil, gold and other commodities.
This also continues to suggest that the Fed will pause in its interest rate lowering campaign when it announces its next decision on Wednesday June 25.
That’s power y’all! How come when I put up a blog post it doesn’t move the market like that? Because being sexy isn’t the same as being powerful.