Weekly Market Review 3 of December
OVERVIEW

In the beginning of 2012 the head of FRS Ben Bernanke used an expression “a fiscal cliff” in order to attract attention to the woe. He emphasized the threat to America from the combination of such factors planned by the end of the year as rise of federal taxes and expenditures’ cuts. In the conditions of modern economy the planned measure will most likely be a push to “fiscal slope”, implying that the effect of tax raise won’t be felt at once (there will be some time needed for income correction) as well as the consequences of the steps of expenditures’ cuts (in a certain way the government might realize it the way it wants). Such a motion up might give a real base for restoration of profit part of the federal budget up to the condition in the middle of 1990s. And again it brings the thought about comparison of the attitude towards the solution of the economic issues in the US and the EU. America empirically came to conclusion that there is a need to stop dealing with the swamp of “fiscal consolidation”.  But Europe doesn’t seem to turn from this mode of action no matter what. Thus there’s no wonder that due to conservatism of the EU the existence of the Euro in a long term is seriously doubted. And of course the Euro can’t even be imagined in a role of world reserve currency or a currency for international payments.

CURRENCIES

EUR/USD


The Euro grew against the US Dollar from 1.2879 to 1.3027 with further dip to 1.2985. Bank analysts assume that the Euro preserves good potential of growth in the short run. The closest boundary upwards is 1.3375. And the next goal will be around 1.3517. But the narrow range of 1.3180 - 1.3200 presents quite strong resistance and inability to break it will mean the failure of the aforementioned scenario. The support in the negative scenario will be near 1.2890. If it doesn’t withhold, the prices will go further testing 1.2740 and 1.2710.



GBP/USD


The Pound appreciated against the US Dollar from 1.5961 to 1.6062 with subsequent decline to 1.6010. Analysts assume that the leap of the Pound above 1.6070 remains necessary for buyers. Such a scenario would let us assume a potential of testing maximums of October around 1.6185. Meanwhile nevertheless the technical picture suggests the retention of control in the hands of sellers. It is expected that the absence of progress in the upward movement will lead to the reduction of the long positions and the development of the downward trend. The support is in the area of 1.5930.