Forex News – Bernanke Fuels Optimism in Markets as He Signals Feds Could Undertake... |
Bernanke sparked a huge wave of optimism in financial markets on Wednesday after he signaled in his semi-annual testimony before the House of Representatives that the Federal Reserve Bank is ready to undertake a third round of quantitative easing (QE3) if economic growth weakens further over the coming period, as Bernanke signaled that the recovery remains moderate so far, while unemployment remains rather elevated, and inflation seems to be easing.
Stock markets in the United States and Europe rose on Wednesday, as traders targeted higher yielding assets, which also boosted commodities including crude oil and precious metals, as gold prices hit a new record high amid the dollar’s weakness.
Bernanke’s testimony overshadowed mounting fears from the European debt crisis, as traders are concerned that the debt crisis will spread to Italy, the Euro Zone’s third largest economy. Nevertheless, Bernanke’s pledge that the Fed will do everything possible to make sure economic growth picks up pace was still the dominant headline in markets.
Stocks in the United States rallied by opening on Wednesday, where the Dow Jones Industrial Average was up by nearly 1.20% to trade around 12,600, while the S&P 500 index was up by nearly 1.25% to trade around 1330. European stock indexes were higher before closing on Wednesday, where FTSE 100 was up by nearly 0.70% to trade at 5910 and the DAX was higher by nearly 1.50% to trade around 7280.
The U.S. dollar fell strongly against a basket of major currencies on Wednesday, where the U.S. dollar index was trading at 75.26, compared with the opening level at 75.88. The Euro rose back against the Dollar, where the EUR/USD pair traded at $1.4151, compared with the opening level at $1.3989, and the British Pound also gained against the Dollar, where the GBP/USD pair traded at $1.6076, up from the opening level at $1.5925.
Gold prices rose to a new all-time record high on Wednesday; where gold traded around $1585 an ounce, and crude oil prices were also higher supported by the dollar’s weakness and the bigger than expected drop in crude oil inventories as reported by the EIA, to trade around $98 a barrel.
Originally posted here.
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