Dollar (UUP) Rebounds On Bullard Comments

The US Dollar (

) rallied against the Japanese Yen (

) and several other major currencies today after St. Louis Federal Reserve President James Bullard indicated that the US monetary authorities might have to start lay ground for gradual tightening if economy continues to recover at current levels. Bullard went further, stating that the Fed might even stop short of the initial amount of $600 billion of the QE2, cutting it as much as by $100 billion, given, of course that the global economy stays clear of any new scares and continues to recover gradually. Those comments effectively boost growing belief among most of the analysts that any possibility of QE3 remains highly unlikely at this moment, while underlining the fact that there is more hawkish sentiment among the Fed officials recently. After the comments, USD/JPY soared from 81.70 all the way to 82.46, the highest level for more than two weeks. The US Dollar pushed significantly higher against the Swiss Franc (CHF) and the Euro (EUR) too, as the USD/CHF jumped from 0.9150 to 0.9220s, while the EUR/USD lost 100 pips, falling from 1.4147 to 1.4046, although the pair has recovered almost half of it during the last hour and is currently trading at 1.4090s.