Dollar Boost May Be Short Lived

With most markets closed for the May day holiday the unexpected announcement of the death of Osama Bin Laden has, so far, had little impact on the markets other than a minor rebound in the US dollar, a pullback in gold and a small boost to equities.  Whether this pattern continues remains to be seen and markets may simply pick up where they left off last week with the US dollar once again the focus of attention following Ben Bernanke’s first ever press conference in which he emphasised that, while the $600bn QEase programme would end as stated in June, the Fed would not begin shrinking its balance sheet.  The immediate result was to send gold soaring ever higher and the US dollar towards its 2008 low of 70 on the dollar index.  The Gavyn Davies post in the FT neatly sums up Bernanke’s performance as well as explaining why he (Bernanke) does not accept that higher oil prices lead to higher inflation (unlike the ECB) – an interesting and illuminating read.

Oil prices fall on Bin Laden death