Dollar/Swiss pierces lower as Ben Bernanke provides thicker hints about a possibility of a third quantitative easing program, and acknowledges the sheer weakness of the US economy.
The dollar is also losing ground to the euro among other currencies. In an official testimony in congress, the Chairman of Federal Reserve went one step further than the words seen in the FOMC meeting minutes:
He spoke about the significant damage inflicted on the economy by the fact that many people are out of the market for a long time. They lose their skills. And here is the hint:
…weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support… initiating more securities purchases
Apart from Ҡ= QE3, Bernanke also floated the option of totally flattening the interest rate:
The Federal Reserve could also reduce the 25 basis point rate of interest it pays to banks on their reserves, thereby putting downward pressure on short-term rates more generally. Of course, our experience with these policies remains relatively limited, and employing them would entail potential risks and costs.
USD/CHF is now at 82.30. It held onto the previous low of 82.75, and started falling afterwards.
Another reason for this drop might be the incoming reports about bomb blasts in the Indian city of Mumbai. At the time of writing, there are initial reports of 3 blasts and at least 4 people killed. Global worries aid the Swiss franc, the ultimate safe haven currency.
