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Flash: Decent round of USD selling post Bernanke expected - Westpac

FXstreet.com (Barcelona) - The Fed chairman Bernanke’s testimony on “The Economic Outlook” to the Joint Economic Committee of Congress at 14GMT is the event that market participants are waiting for.

In view of Sean Callow, FX strategist at Westpac: "He will deliver a prepared text then take numerous questions from both friendly and hostile lawmakers. Volatility over the course of his appearance seems assured, as markets try to quickly decide whether Bernanke is trying to dampen talk of reducing QE some time soon, is affirming such a view or remaining non-committal."

With regards to the possible USD performance, the currency "should gain in the latter two scenarios but we still expect the first outcome – Bernanke arguing that it is too soon to be confident that the economy is recovering sustainably" Sean said.

"While this should see a decent round of USD selling, it won’t be the death knell for this month’s dollar rally, given that the Fed will remain data-dependent. Attention will then turn to the next key data: May ISM and employment in early June" Sean added.

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