Can you talk a currency into gaining value? It seems Fed Chief Ben Bernanke and European Central (ECB) President Trichet think so. They’ve been telling anyone who will listen how serious they are about fighting the inflation monster that would cheapen their currencies.

In effect, these two Central Bank Masters are trying to literally persuade the markets into thinking their currencies are stronger than they are. It’s called jawboning.

And guess what. It’s actually working…at least for now.

First Ben Bernanke threw his hat into the ring last week, and pushed the dollar higher with his few inflation hawk sentiments. Then Trichet jumped in the ring, and wiped out the dollar’s gains, by “talking up” his beloved euro. Then Bernanke jumped back in, along with his buddy Treasury Secretary Paulson, to push the dollar back up.

This is getting ridiculous.

Once upon a time, currencies were based on more than just who was speaking at the podium. Better take refuge now, with the two currencies that traders rush to, when the markets are a bowl of confusion.

Until Next Weekend,
Kathlyn Von Rohr
Weekend A-Letter Editor

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Source: Talking the Dollar Higher