Forex Flash: Door not closed for QE in USA – Deutsche Bank (Barcelona) - Friday was all about Bernanke's speech at Jackson Hole. Not surprisingly the Chairman didn't pre-commit to further QE but instead used the forum to evaluate the effectiveness of both traditional and non-traditional policy measures over the past five years.

That being said, he also concluded that non-traditional measures were not only effective but the benefits also currently outweigh the cost. According to Macro Strategy analysts J. Reid and C. Tan at Deutsche Bank, “The door for further QE is clearly not shut and is very much dependent on what the near term data tells us about the labour market trend.” In response to Bernanke's speech, Friday saw UST 10yr yield fall 7.5bp to close at 1.548% at a near four week low while Gold popped +2.2% higher to close at USD $1692/oz (highest since 12 March)

Post Jackson Hole, the QE spotlight will thus shift back to Europe as the ECB Governing Council meets this week for an important two-day meeting. The meeting will conclude on Thursday and Draghi's press conference will likely be the highlight of the week with markets hoping for further guidance around the ECB's bond purchasing program and also perhaps the seniority issue.

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