Front Page WSJ Article On Bernanke’s Speech Yesterday
[Chairman Bernanke] went today where no other Fed chairman has gone in my 20 years of doing this. He dove into the deep end of the dollar policy pool.
– David Gilmore (subscription required), Foreign Exchange Analytics
As we’ve discussed before, when The Wall Street Journal writes a front page article about a Fed decision or speech and quotes “people familiar with the matter” you want to read it because it gives you pretty much direct insight into the Fed’s thinking and intentions.
So today’s “Bernanke Bolsters Weak Dollar” (subscription required) is must reading.
One thing I learned from the article is that Bernanke spoke with Paulson before giving the speech and the two coordinated what they said as Paulson talked up the dollar on Monday.
Also the reference to monetary policy being “well positioned” is another way of saying that the Fed is on pause – which I noted yesterday.
I think this means the dollar bottom is in, especially against the Euro. I called a top in the Euro at $1.50 back in February and I was a little early. I think the $1.60 we saw in late April is the top ($ Euro 4 Year Chart). As they say: the way to call a top is to keep calling it!