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As a bull on the reflation trade for most of this year (started in earnest when Bernanke ramped up QE on March 18th when the FOMC announced they were going to start buying US Treasuries as I thought the Fed will now stop at nothing to create inflation), I’m now wondering whether Bernanke’s comments about the US$ yesterday is the beginning of a rest in the trade. While I remain a long term bull on reflation, believe the secular trend remains down in the US$ and I firmly believe Bernanke will be all talk and no action with regards to our currency, the trade has gotten extremely crowded and we may now face further jawboning from Fed officials that can create a counter trend rally. While the US$ rallied for all of 10 minutes yesterday and FX traders quickly thereafter faded Ben’s comments, I can’t ignore Bernanke’s 1st attempt to talk about the US$ in such terms.