EUR/usd

How capricious the markets are! On Friday Bernanke expressed his grave concern about the current state of affairs in the labour market. In fact, formally this sphere is hardly the most troubled one in the USA. So it is just a political trick, a kind of attempt to inject another portion of adrenalin in the economy before the elections. It is meant to assure electors that the present government has done enough to stimulate the economy and is now busy with other, more understandable for the electorate, issues instead of rescuing the banks or housing market, which makes less than 10% of the economy.  Bernanke's speech has brought most commentators, including representatives of prominent news agencies, to the idea that the new round of QE will be launched already in September (the next meeting is on September 13). Anyway, hardly had Bernanke begun his speech when the single currency and the markets started rolling down. However soon they regained their composure. Generally speaking, the last trading day of August proved to be exceptionally volatile. From morning the euro started growing from the level of 1.25 and eventually rose almost to 1.2630. On the surge of optimism from Bernanke the currency spiked to 1.2640, but the wave of sell-offs didn't let it go higher. The euro closed out the month and the week below 1.26, which is almost two big figures from the 200-day MA (1.2850). The move down from 1,2640 showed that the markets didn't want to break above the resistance of the upward channel.  However, it is interesting that the pair should hold close to the upper boundary, unwilling to decline to 1.24. This points at the strength of bulls. We can understand the players: the promise of QE by the Fed is definitely a negative event for the dollar. In 2010 it deterred growth in the dollar and drove EUR/USD from 1.26 to 1.42 by the beginning of November. The announcement of Operation Twist managed to push the euro from 1.30 to 1.42. Moreover, all this was happening against the background of aggravating issues in Europe. Now the markets expect that the ECB will show its power. And this is going to be positive for the euro. It only remains to see how draghi will deal with Bundesbank's opposition and how strong resistance of small northern countries will be. On the whole, the positive dominates over the negative now, however all these factors have been built into the rates, so we can expect a gradual upward trend rather than an immediate rally.

GBP/USD

The sterling/dollar is the best currency to illustrate how negative Friday's speech of Bernanke told on the dollar. The thing is that the major risk for the euro zone this week is posed by the events of coming Thursday (very often the actual political measures of EU leaders have proved to be too insignificant). In the meantime, Britain is unlikely to spring any surprises: the Bank will surely want to see the results of its Funding for Lending programme. Unlike the single currency, the sterling is above its 200-day MA now and this is a really good disposition by the beginning of the financial year in the USA. Now GBP/USD is trading at 1.5850. It's quite possible that the sterling-bulls are targeting the level of 1.60.

USD/JPY

The decline of the dollar was very extensive – the currency dropped even against the yen. USD/JPY still can't recover from the fall on August 22. Apparently, the movement outside the channel from 14th till 22nd of August was a false break and now the markets are again functioning in their usual mode. The expectations of further easing of the monetary policy by the Fed is again reducing the spreads between the yields of American and Japanese bonds. And USD/JPY is very sensitive to this. We don't expect any large measures from the bank of japan, so in our opinion the pair may grow only in case of higher speed of inflation in the USA or a sudden cancellation of QE by Bernanke.

gold

Still Gold has left the channel. Since August 20 the commodity was holding in the downtrend, but near the resistance line, drawn through the highs of last September and February. However, the Friday move up made it clear that the period of summer lull was finally over and that Gold could again become the only instrument which would keep the capital while most CBs favoured devaluation of their domestic currencies.