EUR/usd

Concluding from the recent speech of Janet yellen, the new chairman of the Fed promises to be even milder than Bernanke. In the comments, prepared for today's report to the Senate Committee, she says that yet the Fed has got lots of various means to support the economy and the labour market, which are now far from the potential rates. Upon the whole she believes that now it is necessary to provide as many incentives for growth as possible in order to return to the normal mode of the monetary policy. In this case we see a striking difference between the Fed's approach and what the ECB and BOJ have been doing so far. The BOC and BOE (then under the rule of King) made similar suggestions. However, it was a few years ago and now the financial world on the contrary is waiting for the return to the normal policy. Yellen's comments spurred growth of stock markets and slightly weakened the dollar. To our ascending row of intraday lows we can add one more – yesterday's 1.3389. At that the daily high was hit slightly before the midnight (GMT) at 1.3498. Actually, these speeches may not only imply readiness to provide more incentives, but also may serve as a reason to cancel or cut the current programmes, suggesting some (no specifics) substitution, should the economy go down. And truly, we hear more and more often from the Fed's officials that the CB's balance sheet is swollen too much ($4trln). So, let's see how Yellen's opinion will influence other members of the Governing Council of the CB. On the other hand, October's employment rate was surprisingly strong, showing that business didn't fear the political uncertainty caused by the government shutdown. We can't disregard this variant either and we do not completely deny that the Fed may cut the bond-buying programme already in December. At least by the minimum 5-15bln a month to gradually prepare the markets for changes. 

GBP/USD

The cable performed a quite deserved return above 1.60 due to the strong employment statistics and the following acknowledgment of the BOE that the threshold level could be reached earlier than forecasted in July. A series of strong macroeconomic releases have brought the forecast date nearer by 3 quarters, which is not little, and the Bank of England once has again proved that it predicts worse than the market. If it is a skilful game to direct the markets into the right channel, it goes counter to the CBs' principles of predictability and transparency, which should be put before all else in a difficult economic situation.

USD/JPY

The preliminary rate of the Japanese economic growth in 3Q managed to slightly surpass the expectations, going up by 0.5%. Against the previous year the economy has grown by 2.5%, which is also not bad. The only disappointment fact is that growth of consumer and business spending is getting slower. Households increased their spending by 0.8% in the first quarter, by 0.6% in the second quarter and just by 0.1% in the third one. As a result, the markets are selling the yen and the pair has already returned to 99.70, but quite reluctantly. 

gold

Last week Gold fell down below $1300 per ounce, which was largely caused by strength of USD. In the first half of this week the precious metal managed to test 1260, which it bounced off in October. Now performance of USD is back the main driver of growth, so the possible weakening of the currency may be much to the benefit of Gold.