Dollar Soft On Dovish Comments By Fed Bernanke

The dollar weakened against other major currencies after Fed chairman Bernanke reiterated the pledge of "maintaining highly accommodative policies for as long as they are needed." He expressed consent with Yellen's comment last week and said, "the surest path to a more normal approach to monetary policy is to do all we can today to promote a more robust recovery." He expected labor market continues to improve and inflation moving back to 2% target "over the medium term". And, Fed will "likely begin to moderate the pace of purchase" if incoming data support these views. Meanwhile, he also emphasized that rates could remain low "perhaps well after" unemployment rate drops below the 6.5% threshold as Fed "can be patient in seeking assurance that the labor market is sufficiently strong before considering any increase in its target for the federal funds rate."

Chicago Fed Evans said that he's "not in a hurry" to scale back the USD 85b per month bond purchase and Fed is likely going longer at that pace. He'd prefer to "wait just a little bit longer and have more confidence" with "ample safeguards in place". A "couple more meetings" would be quite welcomed to have "greater assurance that the labor market improvement is sustainable". He noted that total bond buying could top USD 1.5T level and "several months ago", he said the total could be about USD 1.25T. And, he said that with low inflation, he didn't see risk on the Fed's USD 3.91T balance sheet.

Technically, both the EUR/USD's break of 1.3547 minor resistance and the USD/CHF's break of 0.9090 minor support suggests further dollar weakness ahead. While the EUR/JPY jumped, the USD/JPY lagged behind and struggled to stay above 100 psychological level at the time of writing. Also, the AUD/USD breached 0.9421 minor resistance overnight. However, the USD/CAD stayed a strong recovery ahead of 1.0397 resistance which argues that the Canadian is even weaker. More Fed officials will speak today including Dudley, Bullard and Weale. Also, Fed will release FOMC meeting minutes.

On the data front, New Zealand PPI rose much faster than expected in Q3. PPI inputs jumped 2.2% qoq versus expectation of 0.6% qoq, PPI outputs rose 2.4% qoq versus expectation of 1.0% qoq. Australia Westpac leading indicator rose 0.1% mom in September. Japan trade deficit came in larger than expected at JPY -1.07T in October. China conference board leading indicator rose 0.6%. BoE minutes will be a focus in European session while Germany will release PPI and Swiss will release ZEW. A number of economic indicators will also be released from US including retail sales, CPI existing home sales and business inventories.