The US Dollar was able to maintain the gains made on Friday after a late day cheering session by Federal reserve Chairman Ben Bernanke helped raise expectations of a tighter monetary policy as the current recovery progresses. Although Bernanke offered no new dialog, a selloff in US Treasuries helped boost overnight rates back above Japanese rates thus making the Yen the current cheapest funding currency. The action today reflected this change, as the Yen was sold and the dollar remained steady to a bit firmer. Although a Japanese Holiday today, and a US and Canadian Holiday tomorrow deadened the action, there were still strong moves, most notably in the buying of cross yen currencies.
The GBP/YEN led the charge higher after it opened lower by almost 30 pips near 141.80 and progressively made its way to levels at the 143.20 region. EUR/JPY was less dynamic, with a move from near 131.80 to 132.70 over the course of the day. AUD/JPY also advanced about 60 pips to over 81.45. The Dollar made progress against the Yen as well, breaking the 90.20 levels that have not been visited since the last days of September.
Against the Euro, the Dollar failed to hit Friday's highs but yet remained in striking distance with 1.4680 touched on a high. GBP/USD touched a 1.5810 low, but quickly bounced back near 1.5880 to post positive gains on the day. With no real data due out today many are looking ahead to this week's US earnings releases, which could offer a spark for those banking on the words of Chairman Bernanke.
