Bankers Disappointed by Bernanke and Geithner
Markets were disappointed by both Fed president Bernanke and Treasury Secretary Timothy Geithner’s remarks and testimony in front of a House Committee and Interbank Forex markets were no exception. Geithner’s remarks left many interbank forex brokers with the impression that the actions taken by the Obama administration are no different from those taken by the previous Bush administration.
Plans Lack Original Ideas
The perception was that the Obama administration’s plan which could cost over $2 trillion dollars covered key areas but lacked original ideas. The US dollar rallied on Tuesday on interbank forex markets as a return to risk aversion sent investors seeking safe haven. Adam Fazio, of CIBC World Markets commented on the plan, “People were expecting the government to come up with details on how to fix things. And it doesn’t sound that more details about the plan are forthcoming, so I think there is more risk inherent in the market.”
Further Delays For Rescue Plan
Geithner’s remarks were short on detail and interbank forex brokers remained concerned about how the new Obama administration intends to address sluggish credit markets that are crippling the economy. Interbank forex markets remain concerned about the $838billion economic stimulus package which now has to pass the Senate and the House of Representatives causing further delay. The lack of details and the expected delay have caused great concern among interbank forex brokers and their clients.
Investors Seek Safe Havens
The Euro rose 0.5% against the US dollar to $1.2953 while the British Pound fell 0.7% against the dollar, and the Japanese Yen traded at 90.23 against the dollar. Market volatility and the lack of details in the US rescue package have many interbank forex brokers seeking the safe haven of US treasuries and the Yen.
Markets Remain Uncertain
Interbank forex brokers hope for swift action from the US Congress and hope that legislators can put aside ideological differences and pass the proposed rescue packages. Until then markets will remain uncertain and trade will suffer.
