Forex Market Summary

U.S. Dollar Trading (USD) eased against a number of majors as Fed Chairman Bernanke signaled the Central Bank may continue to cut rates further, amidst concerns the US was headed into recession. His comments addressed the Fed 'will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks', causing futures market to price in an 80% chance that policy makers will move to cut by another 50bps in the next rate meeting on the 18 march. In U.S. share markets the NASDAQ was lower on Thursday by 41.39 points (-1.74%) whilst the Dow Jones also fell by -175.26 (-1.40%). Crude oil fell by rose by US$2.15 a barrel to US$95.42. Looking ahead, heavy data day is scheduled for Friday, with the releases of TIC flows, NY Fed Manufacturing, Industrial Production, and Michigan sentiment survey.

The Euro (EUR) rallied to a week high post 'dovish' Bernanke comments yesterday. On the data front, Eurozone GDP came in better than forecasted in at 0.4%/2.3% for the fourth quarter (Forecast: 0.3%/2.2%). Overall the EURUSD traded with a low of 1.4550 and a high of 1.4649 before closing the day at 1.4634 in the New York session. EU Trade Balance on is scheduled for release on Friday.

The Japanese Yen (JPY) erased a loss versus the dollar as Bernanke warned that tighter credit will be a 'restraint on economic growth', sparking declines in U.S. stocks. Overall the USDJPY traded with a low of 107.77 and a high of 108.61 before closing the day at 107.97 in the New York session. Looking ahead, the BoJ is scheduled to make a rate announcement, although widely expected that rates will be held at 0.50%.

The Sterling (GBP) pound gained against 11 of the 16 most-traded currencies as traders reduced bets on interest-rate cuts by the Bank of England this year after Governor Mervyn King said on Wednesday, that price growth will overshoot the bank's 2 percent goal in two years. Overall the GBPUSD traded with a low of 1.9616 and a high of 1.9738 before closing the day at 1.9688 in the New York session.

The Australian Dollar (AUD) was boosted by all time lows in Unemployment Rate coming in at 4.1%, below forecasted figures of 4.3%. The buoyant data confirmed that the labour force had grown by 26.8K jobs, adding to growing expectations that the RBA may move to increase rates in their March meeting.

Gold (XAU) traded steady around $910 levels amid rising oil prices. XAU traded with a low of 902.15 and a high of 913.80.

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