The longest wait is coming to an end

Nearing the end of a week when he gave a really strong resistance, which allowed the main index of the dollar's rise by 0.70%. Only a pound could outstrip the dollar, moving the strength of both currencies has been the change of political expectations. The Fed began a new position QE as more restrained, this shift is due to the lack of cohesion in the FOMC and the pressure from the international arena, which does not suit U.S. policy, aimed at understating the dollar. ECB, Reserve Bank of Australia and Bank of England will meet next week, then monetary policy will become a leading driver of currencies.

Although most attention focused on the Fed, there are also risks of RBA tightening. The position of the ECB is a desire to leave everything unchanged, but in the new year to get rid of the "temporary" measures in the money market. They may experience difficulties with the growth of the real economy. Finally, the Bank of England is unlikely to change rates or to implement the second phase of the QE. Nevertheless, some policy changes are still likely in the coming months, either by QE, or reducing interest rates or changes in the way of reserves by the Bank of England.

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AUD: Aussie vulnerable to rollback this week, due to the reduction LONG

Ossie is preparing for a heavy week and the key decisions on interest rates, both in the U.S. and in Australia. The market turned in the direction of a more coherent view on QE Fed, and it made the Aussie vulnerable to roll back this week because of cuts Long in anticipation of the future environment. Before this, on Tuesday, the Reserve Bank of Australia announced the decision on interest rates. As expected, the policy will not change, especially after more sluggish than expected CPI data this week. Nevertheless, the policy bias remains RBA to tighten and interest rates would likely rise from its current "neutral" level of 4.5% early next year.

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The dollar has lost, despite the good economic data

It would be reasonably expected to strengthen the dollar yesterday in response to the exceeded expectations data on requests for unemployment, but the game did other factors. First, some traders to withdraw money on the actions of the Federal Reserve Bank of New York (he was interviewed market participants about their views on the QE, which will come into play next week).

Secondly, there were signs of interest in buying beaten and crushed peripheral bond markets, which helped the euro. And thirdly, it seems that the reserve managers in forex continue to buy currencies such as euro falls. At Sterling was another stellar day, raise it to 1.59, and forced a pair of EUR / GBP 0.87 almost touch. Good data from the CBI has also helped, as well as buying at the end of the month.

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Unemployment in Germany fell to 18-year low, but retail sales have fallen

Other advanced economies need to take note - Germany continues to deliver. The number of unemployed in Germany fell by another 3,000 in October, with the number of unemployed is now at 2.945 million, its lowest level in 18 years. Consumer confidence remains high, as well as the mood in business circles. Meanwhile, retail sales in September fell 2.3% m / m, which was the largest drop since March 2008. The data can be volatile in large part, but will be closely monitored in the coming months, as the main criticism of the German model - is that it does not do enough to stimulate domestic demand.
Merkel's attempts to change the union of the EU hit in the shoulder. German Chancellor Merkel has tried to persuade European colleagues of the merits of voting rights of those EU countries that have a high fiscal deficit, but did not reach a definite success. EU President Barroso has described its assumptions as unacceptable and unrealistic, and Luxembourg Prime Minister Juncker said that he rejects the "simple answers to complicated questions." Another part of crisis-resolution Merkel included maturities for countries with high debt, suspending interest payments on time, and the imposition of the refusal of creditors' claims.

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EUR: After the operation, the ECB's refinancing short-term interest rates fall

After the operation, the ECB's refinancing earlier this week, short-term interest rates fall. This event is essential, since rates have nearly doubled over the past two weeks, partly due to the liquidity and partly because of rising expectations of tighter lending ECB (or the folding of exceptional measures) at the beginning of next year. This may have some downward pressure on the euro, since a further reduction of the curve and interest rates will benefit the common currency, and the Libor spread pair USD / EUR moves to 70 points by Thursday. Today, the focus remains the last day of the meeting of the EU in Brussels. Meanwhile, the peripheral bond spreads widen again, Greek added nearly 20 points this morning, the Irish are also growing. Despite this, the euro keeps well against a confident political framework for the euro until the end of the year, so that the ensuing weeks all will be linked to the Fed in the context of determining the direction of EUR / USD.

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GBP: There is a tendency that the BOE operates in the month when the report goes on inflation

As soon as the Fed's decision will come into force next week, investors pounder immediately begin to worry about meeting the Bank of England, which will be held on Thursday. While the GDP data this week, appear to have tempered expectations that the Bank will do without QE, there is a significant trend of the Bank of England to act in a few months out of the report on inflation (50% of all actions were in the same month) and this probably will keep the market in some exasperation. In a broader perspective, there is also the likelihood that the Bank may decide to cut interest rates from the current 0.50% and / or change the way the use of bank reserves as an incentive credit. Pound light only 1.60 by the end of the week, but he clearly is not enough lubrication to move higher until QE United States does not exceed expectations and will not send the dollar back down.

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CHF: Swiss Franc did not move forward, but won against high rates

As the market moved to hedge their bets just before the Fed meeting next week, the Swiss franc did not move dramatically forward, but won against those high currencies dominated by longs against the dollar. A more consistent approach to the QE, above all, should be less in the style of "shock and awe" that could ease the pressure on the CHF and reduce the currency, which would help the Swiss authorities. At the moment it works on EUR / CHF, which was prodavlen level of 1.35, indicating a 6% decline against the euro since the beginning of September. Concerns related to the intervention of SNB, still affect the background level.

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