In his report to Congress that began yesterday on 17 July 2013, Federal Reserve Chairman Ben Bernake continued to deliver mixed messages regarding the state of the American economy as it stands to play out over the coming period. 

Bernake indicated that the Fed is likely to continue on its path of stimulus activities through its $85 billion Treasuries and bonds purchasing program due to concerns over unsatisfactory employment figures. At the same, he has made recent remarks indicating that the Fed may decided to begin to reduce their quantitative easing measures over the coming year as economic markers are reached.

Analysts note that while Bernake’s comments regarding the possibility of a reduction in stimulus has proved to entice the markets, his statements concerning the need for its continuation have created an increasingly volatile market situation which struck the USD in early trading before recovering to beat out most of its rival currencies

Analysts advise traders to proceed with caution in transactions involving the USD as the markets continue to react to the recent news. Additionally, Bernake is due to recommence with his appearance before Congress tomorrow 19 July which will likely lead to additional market shifts throughout the day. 

Canadian CPI Report to be Issued on 19 July

The Consumer Price Index report for Canada is set to be released tomorrow 19 July 2013. The data will be closely watched by observers who are concerned over the potential effects that the report may have on inflation which in turn may influence the value of the Canadian dollar in its currency pairings. 

Analysts note that many experts are preparing for a significant spike in the Canadian CPI as the value of the CAD has declined in recent weeks, partially due to the strong recovery of their southern neighbor, the US which has shown signs of growth.

It should be noted that the CAD has suffered a two day set of losses which are likely to continue in reaction to statements by Bank Governor Stephen Poloz indicating that he may decide to leave interest rates unchanged until economic indicator start to show signs of improvement.   

Traders are advised to prepare for potential shifts in the value of the CAD for its pairings in both the lead up to and following the issuance of tomorrow’s report.

GBP Makes Gains While Yen Takes a Fall

On the heels of a report citing two months of positive figures concerning retail sales in the UK, the pound succeeded in making progress against the vast majority of its competitors. In reaction, many experts in the UK have become optimistic about their potential for continuing a comeback based on strong sales numbers, noting that they have been able to close the gap against the greenback and are making continued gains against their other rivals. 

Meanwhile, the Yen showed losses as the Bank of Japan remains engaged in a plan to encourage inflation and work towards a recovery. 

Analysts do not believe that the GBP will be able to maintain its current dominance over the USD for the long period but will likely maintain their position over the Euro and other weaker currencies.