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This week, Fed Reserve Chairman Ben Bernanke reported to the House Financial Services Committee in Washington DC.

This particular testimony usually triggers a lot of volatility in the markets as the Chairman takes this twice-in-a-year opportunity to orient policymakers about his assessment of the economy and outlook for future monetary policy.

Since QE3 has been the talk of the town, traders had their ears open for clues regarding further easing from the Fed especially since other banks like the BOE and ECB have already started to adopt looser monetary policies.

However, contrary to what many were expecting, Big Ben said that there’s no immediate need for QE3. Surprise!

Now, don’t think that Bernanke just thought it would be funny to see the dollar leap up the charts on Leap Day with his not-so-dovish remarks. The head honcho actually has a few reasons why he thinks it’s not yet time for another stimulus package.

For instance, it’s noteworthy to point out the improvements in the labor market. The unemployment rate has dropped faster than expected. It is now at its three-year low at 8.3%, down from 9.1% in August 2011.

There are also fewer people claiming unemployment benefits. On average, employment in the private sector has grown by 165,000 jobs per month since June of last year with 260,000 jobs generated in January 2012.

Big Ben also acknowledged the rebound in consumer confidence and the increase in household spending. Proof of this is Conference Board’s consumer confidence index when it printed at its one-year high at 70.8 for February and so is the upward revision in personal consumption for Q4 2011 from 1.9% to 2.1%.

Economic data also hint that the manufacturing sector is performing well. The Richmond manufacturing index for February came in higher than expected at 20 versus the 11 forecasts. Meanwhile, the Chicago PMI printed at 64.0 and topped the 61.6 consensus.

Last but not the least, although Bernanke was wearing his poker face, I could tell that the upward revision to 3.0% from 2.8% in the Q4 2011 GDP made him giddy inside.

As for their next monetary policy moves, the Fed head remained mum about when they’d add another shot of liquidity in the U.S. markets.

From the tone of Big Ben’s voice, it seemed that he was pleased with the recent bright spots in the U.S. economy but remained cautious with his outlook.

This suggests that the Fed could stick to its wait-and-see mode when it comes to monetary policy.

On top of that, Bernanke affirmed the central bank’s pledge to keep interest rates “exceptionally low” until mid-2014 as stated in the Fed’s interest rate forecasts.

Although Big Ben sees the economy stabilizing in the near term, with joblessness declining at a slightly slower pace for the rest of the year, many still believed that QE3 isn’t completely off the table just yet.

So what does this mean for the U.S. dollar and the markets? Judging from the initial market reaction, dollar bulls seemed to be overjoyed that QE3 is less likely in the near term as the Greenback surged against most of its major counterparts, except for the Canadian dollar.

Commodities, on the other hand, suffered a huge slump as gold, silver, and copper sold off right after Bernanke’s testimony.

You see, precious metals like these are usually treated as a hedge for inflation, which means that rising price levels typically lead to higher demand for what Big Pippin calls shiny bling-bling.

Weaker prospects of QE3 led market participants to expect that inflationary pressures would be subdued, forcing precious metals to lose their shine.

For now, it looks like the U.S. dollar will continue to benefit from Bernanke’s remarks as the Greenback scrambles to regain its safe-haven appeal.