Weekly Market Review 29 of October

The decision of the FRS of the USA to start the third round of QE3 raises three important questions. Will QE3 be able to stimulate the economic growth in America? Will it lead to the stable growth of the risky assets (in particular of the US and other stocks)? And will it equally affect the GDP growth and the markets? This time QE is much bigger in scope and time. There are more and more voices heard that Yuan is gradually pushing away the US Dollar from a position of the leading currency. Though experts believe that at the moment it sounds as an overstatement. On a recent meeting in Tokyo everybody’s attention was drawn to the speech of the FRS representative Ben Bernanke. He called everyone to pay less attention to American currency. A lot of politician’s from the developing states complained that the easing strategy of the FRS destabilized their economies triggering inflation and appreciation of assets’ prices. Developing states have to ease the monetary publicity every time Bernanke is doing that, just because of the habit of following the American currency no matter how weak it might be. Anyway the choice here narrows down to being dependent form either US Dollar or Yuan.



Last week the Euro depreciated against the US Dollar from 1.3082 to 1.2882 with further bounce to 1.2934.Technical picture of the Euro looks pretty bad. The closest resistance is at 1.3170. Inability to overcome it will close the path to upward goals. The probability of growth exists. But apparently it will be short as there are no factors supporting the Euro now.


Last week the Pound appreciated against the Dollar from 1.5913 to 1.6143 with further dip to 1.6091. Analysts agree that Britain owes its positive GDP figure for the third quarter to the Summer Olympic Games. So the effect of the factor is limited in time and for further growth the British currency will need strong positive data. Without it there is a risk to fall near 1.5830 and the risk is quite high.