Front Page WSJ Article On Bernanke’s Speech Yesterday

June 4, 2008 at 3:02 pm  ·  Category: Federal Reserve, Foreign Exchange, Inflation

[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!

Posted by Greg Feirman  ·  Trackback URL  ·  Link
 
No Responses to “Front Page WSJ Article On Bernanke’s Speech Yesterday”
  • I tend to agree with you about a top in the Euro. i have tried to short the FXE several times in the last week and each time I’ve tried I have been unable to do so because my broker (and I’ve tried two different ones) has been unable to borrow any shares. Now, that tells me two things: I’m probably late to that party and we need to find an inverse ETF for the FXE. Do you know of one?

    Mark  ·  Jun 4, 2008 at 8:55 pm  ·  Permalink
  • Mark,

    That’s the way I’ve shorted the Euro before: short the FXE. And that’s what I was planning on doing this time around as well.

    That’s interesting that they couldn’t find any shares because it does raise the possibility, as you say, that a lot of others are already in on this trade.

    One other benefit of this ETF is its liquidity. Its easy to get in and out and the bid/ask is pretty tight.

    Greg Feirman  ·  Jun 5, 2008 at 2:14 pm  ·  Permalink

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