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Market Mover: Bernanke Comments Push Dollar Lowser/Stocks Higher

December 7, 2009

by The TopStock Team

Headline Alert

Market Mover: Bernanke Comments Push Dollar Lower

Not surprisingly, Fed Chairman Bernanke says he Fed expects continued recovery in 2010. However, this is not what has moved the market.

In a presentation to the Economic Club of Washington, Bernanke said again that the economy should continue to recover in 2010 and inflation should remain constrained for quite some time.

The Fed Chairman noted that the Fed will have to unwind the stimulus at some point, though does not provide any insight as to the timing. Bernanke says inflation could even move lower from here in the near term.

Stocks have rebounded since Bernanke began speaking although the reason behind the move may be a little counterintuitive. The bulk of the improvement in stock prices seems to be coming from a pullback in the dollar, with the dollar index down nearly 40 basis points today.

The dollar started to retreat around the time that Fed Chairman Bernanke began to speak and seems to be tied to Bernanke’s comments suggesting that the US economy faces "formidable headwinds" such as a weak labor market and tight credit.

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