Dollar off post-G20 low ahead of Bernanke

By Ian Chua

SYDNEY (BestGrowthStock) – The dollar climbed off early lows in Asian dealings on Monday with market focus turning to a speech by the head of the Federal Reserve, after the Group of 20 major economies agreed to shun competitive currency devaluations.

Market players were keenly waiting to see if Fed Chairman Ben Bernanke would indicate how much Treasury bonds the central bank is likely buy, in a highly anticipated move to pump more money to shore up a faltering economy.

“The risk is he says the Fed is going to include agency bonds in its quantitative easing policy, which may mean (Treasury bond) yields drift a bit higher and the U.S. dollar a little bit higher as well,” said Richard Grace, chief currency strategist at Commonwealth Bank in Sydney.

Bernanke is due to speak at a conference at 1230 GMT.

At the meeting in South Korea, G20 finance ministers also struck a surprise deal to give emerging nations a bigger voice in the International Monetary Fund, recognizing the quickening shift in economic power away from Western industrial nations.

“There is a lot of confusion as to what the take aways are from the G20. So my view is you respect the choppy levels you saw last week because the market is still a bit uncertain about which way to go. So short euros at $1.4000 and $1.4050,” said Philip Burke, a chief currency trader at JPMorgan.

The euro last traded at $1.3942, little changed from $1.3940 late in New York on Friday, with levels above $1.4000 still providing strong resistance.

Against the yen, the euro fetched 113.33 yen versus New York’s 113.41 yen, while the dollar bought 81.29 yen compared with 81.34 yen.

The Australian dollar retreated from an early high of $0.9879, to $0.9839, still slightly higher from late New York.

Data from the Commodity Futures Trading Commission on Friday showed currency speculators reduced bets against the U.S. dollar for a second week, although net short positioning was still at extreme levels. The value of net short U.S. dollar positions fell to $25.8 billion from $29 billion.

A top adviser for the St. Louis Federal Reserve said central bank officials were considering easing that could start with $500 billion and progress in increments as high as $250 billion, but they were worried how such a move would be perceived.

Dollar off post-G20 low ahead of Bernanke