In the semi-annual testimony, Bernanke re-iterated that "low rates of resource utilization, subdued inflation trends, and stable inflation expectations - are likely to warrant exceptionally low levels of the federal funds rate for an extended period." Bernanke noted that 25bp hike in the discount rate and the return of the maximum term of discount window loans to overnight, were not expected to lead to tighter financial conditions for households and businesses and should not be interpreted as signaling any change in the outlook for monetary policy. On the discount window, the final auction of the discount-window funds to depositories through the Term Auction Facility will occur on March 8th. Bernanke did not elaborate further on the sequencing or timing of exit strategies other than referring to his February 10th exit strategy testimony text.

From Bernanke's remarks, UBS economists point out some key economic signals that could influence the Fed's assessment of the economy. They include: continued growth in private-sector final demand for goods and services, continued improvement in financial conditions, gains in real disposable income and household wealth, business investment in equipment and software, single family home starts, commercial construction, and temp services hiring. UBS economists also believe that private sector payrolls will be a main signpost to the Fed's evolving assessment of the economy. Private payrolls will likely begin to rise around 100k per month in Q2.
USD: Remaining range-bound

The dollar remained range-bound in NY trading hours. Fed Chairman Bernanke's remarks were highly anticipated, but his tone remained consistent with the text of his February 10th exit strategy testimony. As a result, the testimony was not dovish or hawkish enough to break current G10 FX ranges. EURUSD traded in a range of 1.3627 - 1.3503, while USDJPY traded in a range of 90.36-89.77.