Weekly Market Review 17 of September
OVERVIEW

The problems faced by the head of the ECB are much more complicated than those of their colleagues in Washington or London. Ben Bernanke doesn’t have to worry about not letting California out of the Dollar union even though Sacramento doesn’t have the best credit rating. But as for Mario Draghi he has to use all the means he’s got in order to try to save the Euro. The plan announced last week is meant to be such a mean.  He hopes that ECB by purchasing governmental bonds will cut the expenditures on loans not only for governments, but also for the private sector of those countries that suffered from the crisis most of all. Thus he is trying to prevent the outflow of capital threatening to spread all over the Euro zone. Even an intention to try to do so already deserves an encouragement. The EU prepares to become a harbor of financial failures where the first name without a doubt will belong to Greece. The USA have begun the third part of the quantitative easing (QE3). But such actions have nothing in common with European processes which are quite disappointing. Even QE3 is more efficient than just incompetent talks about economic stability and problem solving of all aspects of crisis.

CURRENCIES

EUR/USD

Last week the Euro appreciated a lot against the US Dollar from 1.2754 to 1.3168. Apparently this is not yet the limit. Above the level of 1.3536 there is a resistance. Though there was no positive news from EU the Euro took advantage of the Dollar weakness due to recent Bernanke’s announcement. So it makes sense to determine time when Euro will start to be sold after all attempts to grow. Analysts assume that active sales will start around February of the next year.



GBP/USD

Last week the Pound demonstrated some toughness and went up from 1.5959 to 1.6253. In the perspective there is a level of 1.6650 to be tested and if the Pound succeeds to break above it trying the level of  1.7280 will seem quite easy. But this assumption seems quite daring. The Resistance at 1.6745 is very strong.