Time to Listen Up
Looking for a currency trade?
Prepare to listen for clues expressed in central banker-speak on Wednesday and Thursday.
Remember when your kindergarten teacher asked you to use your listening ears? It's that time again.
In a speech this afternoon, Fed Chairman Ben Bernanke will be discussing the economy just days after a string of disappointing reports on employment and more, and investors will be watching closely for any hint of interest in another round of quantitative easing. That notion seemed completely far fetched until last week, when the bad numbers just kept coming. If the Fed does endorse such a shift, expect the dollar to have a very rough ride.
Then on Thursday, European Central Bank President Jean-Claude Trichet will hold a press conference to discuss monetary policy. Listen for two things: "strong vigilance" on inflation and a description of current policy as "accommodative." If Trichet uses those words, the near universal consensus among analysts is that there will be a rate hike in the euro zone in July, which should help the euro. Analysts at BofA Merrill Lynch describe investors as "waiting for ECB's decision tomorrow on whether the magical 'vigilance' resurfaces."
Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm.
"Money in Motion Currency Trading" repeats on Saturdays at 7pm.