The US Dollar has been becalmed as currency traders await a speech by Federal Reserve Chairman Ben Bernanke in New York. Mr. Bernanke is due to speak at 7.00 pm local time ( 12.00 midnight GMT ). Chairman Bernanke is scheduled to address the Economic Club of New York, where he is expected to speak on the current state of the US economy and monetary policy. Just how much he will be willing to say ahead of the Federal Reserve meeting next week is doubtful, but following the widespread disappointment the forex market showed towards the prospects of more than one interest rate hike from the Federal Reserve, every word will be closely examined for some clues to future policy. The Asian markets started the week with a solid sideways session against the US Dollar with no new currency highs being forced by day traders looking for stops put in by weak US dollar longs.This quiet tone continues in early European trading.
Comments on Friday by European Central Bank ( ECB ) board member Jose Manuel Gonzalez Paramo said hard data currently available indicates that the Euro-zone is growing at a rate superior to that forecast by the Bank in December. These were in themselves raised forecasts, to 1.9pct from 1.8pct for 2006 and 1.9pct in 2007.. Inflation risks had not changed since December however, he said, blaming high oil prices for the upward price pressures. "Inflation risks have not diminished since December and the Bank will remain vigilant over risks toward price stability.” He added that “ there is an important risk that inflation could remain above 2 pct in 2007.” Mr. Gonzalez Paramo quoshed the idea circulated recently that the European Central Bank is building its monetary policy around so-called ‘neutral rates’ , a policy which neither stimulates nor dampens growth and which some economists calculate to be around 3.5 percent. "The concept of a neutral rate is not a concept used within the ECB and is not considered a sufficient indicator for monetary policy decisions," Mr. Gonzalez Paramo said. "The Bank is not searching for a neutral rate, nor any target rate in particular. The ECB does not work in terms of target rates." Hmmmm….

Expect some firm details soon by the Indian authorities to make the Indian Rupee a fully convertible currency. Comments by Prime Minister Manmohan Singh that he had requested the Finance Minister and the Reserve Bank of India to come out with a plan for capital account convertibility "based on current realities".