New York Session – February 7, 2012 4:17 PM

The buck reversed earlier gains after Bernanke downplayed recent labor data and the euro rose amid hopes that Greek debt and austerity negotiations are in the final stages. With no top tier economic data released out of the U.S., it was headlines once again that drove price action. Fed Chairman Ben Bernanke testified before the Senate Budget Committee and cautioned that the current unemployment rate “no doubt understates the weakness of the labor market”, noting the reduction in the labor force due to those that are discouraged. The dovish comments boosted market sentiment as it was interpreted that further accommodation is still under consideration (See more in our Fundamental Update: The Beveridge Curve and Bernanke’s comments). The prospect of QE3 put pressure on the US dollar with the greenback declining against all of the G10 currencies except for the yen. Full text »

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