The Fed Chairman stayed away from topics that might move markets in a speech late Monday. The kiwi was once again at the top of the leaderboard while the Swiss franc lagged. Japanese machine tool orders are the lone item to watch for in Asia-Pacific trading as Japan returns from holiday.
Markets were looking for signals from Bernanke about when monthly QE programs would begin to taper but his comments were bland. He emphasized the need for a Congressional debt limit deal and the most-insightful comment was probably that he was 'cautiously optimistic' on the economy. Markets didn't react.
Earlier in the day, regional Fed presidents Lockhart and Williams said they were comfortable with the current status quo. Williams forecast 2.5% growth this year and Lockhart 2-2.5%. Other Fed members have recently forecast growth faster than 3%.
The euro was effectively unchanged on the day at 1.3375. In a sense, the stability is impressive because Spanish 10-year yields rose 14 basis points on the day to 5.03%. It could also be a sign that the daily correlation between periphery yields and the euro is weakening.
Japanese markets reopen on Tuesday after a long weekend. The fresh liquidity could increase volatility. The preliminary December report on machine tool orders is also due at 0100 GMT. Orders should rebound after a 21.3% drop in November.
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