EUR/usd
And again politics are weighing upon Forex. This time the world's major currency has troubles on both sides straight away. The USA is now one more step closer to the government shutdown (for the first time since 1996) and in Europe Berlusconi is about to hold another election. Both in the former and in the latter case the story isn't new and has always turned out well, as politicians eventually has found a compromise, very often being the delay in taking of “the most important decision”. A few more details on this. The US House of Representatives, which is made up mainly by the republicans, has voted to delay the Obamacare bill for another year. Now these bills have to be approved by the Senate, which is very unlikely as the Upper House is controlled by the democrats. Now the question is how events will unfold. Till the end of Monday the houses are to pass the laws satisfying both the republicans and the democrats. If it doesn't happen, public sector financing (of course with an exception of the army, police and aid to low-income groups) will be automatically halted. If earlier we believed that politicians would manage to come to a certain decision before the deadline, now we think that it is quite likely that the negotiations will last for some time after the deadline is crossed, thus making lawmakers work for free for a while. Probably, it will be good for them. Italian affairs aren't much better. Berlusconi refuses to support the government of Premier Letta, which poses a threat of another election as the government will be unable to effectively work and pass laws. In reaction to this Letta has announced a vote of confidence on Wednesday. Prime Minister hopes to get support from some members of Berlusconi's party, which will help to evade new elections. The political uncertainty caused depreciation of eurusd on opening below 1.35. Before that, on Friday, the euro went as high as 1.3560, though still failed to break through the high of September 19.
GBP/USD
The pound is not affected by these troubles. Being far (yet far) from the political mess in the USA and Europe, the sterling is enjoying good demand and last night managed to rise to 1.6180, that is to break above the highs of mid September. Thus, the pair is now at the highest level since January 3. Well, will the pair have enough vigor to break through this year's high – 1.6340?
USD/JPY
The troubles in the political life of the countries with the most liquid currencies in the world have aroused demand for the yen, which provoked the drop of usdjpy to 97.60 on opening of markets. Anyway, the pair has been gradually rising since then. The same situation is in the pair with the euro: the drop by over a figure on market opening hasn't proved to be durable. Having fallen from 133 to 131.7, the yen is slowly retracing back.
EUR/CHF
Despite the strong defense on Friday, on Monday night the pair managed to drop below 1.2240. We can't check it for sure, but in our opinion the defense of this level was the reason for strength of the single currency on Friday. If during the European session the pair again gets support of the markets, it is quite likely that the single currency will start appreciating. Yet, the bulls will hardly be able to break through any technical level. Thus, regarding the euro it can be recommended to sell on growth and regarding EURCHF – to purchase on the decline towards 1.2200.
