Currency traders wait on new data

Story link: Currency traders wait on new data

Currency traders seemed to be waiting for the outcome of new US Federal Reserve Chairman Ben Bernanke’s first appearance before Congress on Wednesday before making any big commitments in the market. The expected release of US economic reports on capital flows on Wednesday and housing starts on Thursday also seemed to be holding traders back on Monday.

While Bernanke is expected by most analysts to stress continuity with the policies of his predecessor, Alan Greenspan, it is also anticipated that he will advocate careful consideration of new data in order to provide guidance for future monetary policy due to the uncertain nature of the economy at the present time.

Analysts worry, as well, that new data releases on housing could have an impact on the economy as a whole, especially if it impacts consumer spending in the wider economy.

Early in the day in European trading, the US dollar was at $1.1890 in relation to the euro and at ¥1.1821 against the Japanese yen.

Consumer spending also was a concern in the UK, with January’s retail sales data due on Thursday. That data is expected to show that strong spending for the Christmas holiday was an aberration, with weaker spending patterns returning in January. Also affecting sterling is the anticipation of the release of growth and inflation forecasts by the Bank of England on Wednesday, which will have an influence over what the Bank will decide on interest rates in February.

Sterling was trading at $1,7386 in relation to the US dollar early in the day, and it was at £0.6837 in relation to the euro.