Halftime Report: Will Fed Support The Dollar?

The fourth quarter kicked off Thursday with profit taking as weaker than expected economic data sent the bulls into hiding.

Specifically, September manufacturing data and worse-than-expected jobless claims released before the bell, overshadowed more positive reports on construction spending.

However it's the dollar that has captured the attention of our traders this afternoon. Testifying before Congress Fed Chairman Ben Bernanke issued a few comments that made the Street sit up and take notice.

He said, “(Although) I believe there is no immediate risk to the dollar…. I also agree (that) if we don't get our macro house in order that will put the dollar in danger.”

Bernanke also said, "We are confident that we can manage our policies to support the economy without inducing inflation in the medium term. We fully believe we have the tools and political will necessary to achieve that."

What must you know to trade this market?

Instant Insights with the Fast Money traders

I think the secular trend in the dollar will probably be lower, muses Fast Money trader Joe Terranova. Despite strength today, I’d bet on dollar weakness long-term.

The comments from Bernanake suggest to me that the Fed could take a role in supporting the dollar, counters Brian Kelly of Kanundrum. The dollar was bid higher on Thursday because investors are growing fearful of a weak economy. I think it goes one of two ways. There could be a coordinated global strengthening or a competitive devaluation.

Looking at the broad market... I’m watching the S&P 500 , explains OptionMonster Jon Najarian. It’s dancing at 1038, he says. If we don’t hold this level it’s very bearish.

I’m seeing very aggressive put buying in the bank sector ETF, reveals JJ Kinahan of TD Ameritrade. Many traders believe that when the market weakens, the financials will show the first chink in the armor. And we may be starting to see it now.

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KKR GOES PUBLIC

KKR on Thursday closed a long-awaited deal to buy its Amsterdam-quoted fund, becoming a Euronext-listed company and completing the first step toward an expected move to the New York Stock Exchange.

A move to a New York listing, which would put KKR on the same playing field as Blackstone, will likely come next spring.

What’s the trade?

I think this is a name to watch, says Joe Terranova.

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Trader disclosure: On October 1, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU): Finerman's Firm Owns (BAC) Preferred Shares, (BAC), (BAC) Call Spreads: Finerman Owns (BAC) Preferred Shares And (BAC): Finerman's Firm And Finerman Own (WFC) Preferred Shares: Finerman's Firm Owns (DRI), (MSFT), (YUM), (BKC): Finerman's Firm Is Short (CAKE), (TLT), (IJR), (IWM), (SPY), (MDY), (USO), (UNG), (TLT): Terranova Owns (XOM) Calls: Terranova Owns March Sugar Futures: Terranova Owns December Crude Oil Futures: Terranova Owns December Gold Futures: Terranova Is Short (GRMN), (ESS), (CCL), (WYNN): Najarian Owns (ACI) Call Spread: Najarian Owns (C) Calls: Najarian Owns (DELL) Call Spread: Najarian Owns (ERTS) Calls: Najarian Owns (GE) Calls: Najarian Owns (MSFT) And Is Short (MSFT) Calls: Najarian Owns (RIMM) Call Spread: Najarian Owns (ORCL): Najarian Owns (TEVA): Najarian Owns (WFC) Put Spread: Najarian Owns (YHOO) Call Spread

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