Not all testimonies before the Senate and House are big market moving events but in this case, we are at a critical juncture in monetary policy and the market is split on whether additional action will be taken by the Fed. As a result, every word that Bernanke says and doesn't say could have major implications for the market and for this reason he will choose his words carefully.
Today's sell-off in the U.S. dollar and U.S. equities tell us that investors are positioning for slightly more dovish comments from Bernanke. Surprisingly weak retail sales numbers in the month of June reinforced the deteriorating conditions in the U.S. economy and hardened the case for QE3. However, outside of overtly signaling the possibility of more stimulus there's not much Bernanke can say or do that he hasn't already.
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