Fundamental review of Forex market for 01.02.2010

During Monday\'s Asian session, the American dollar continued to grow, keeping close near to 6-year highs against the other major currencies, but at the same time the Euro could not rise up than 7-month lows due to budget problems of Greece.

High – yeild currencies do not exercise the prior demand. The players at the market closed positions with a large leverage. Moreover, China is caused concern both from the point of view of its monetary policy and of the geopolitical view point. At the previous week People\'s Republic of China restricted the major banks in the volume of granted loans and it even ordred those banks to return the part of prolonged loans. At the weekend Beijing addressed with the reclamation against the sales of the US arms\' to Taiwan in the amount of $6,4 bln.

It is said in the forecast of the White House that the US budget deficit in 2010 fiscal year will reach a record level of $1,6 trillion, which will be published on Monday at 18.00 (Moscow time). According to this estimation, the budget deficit enhances the previous predictions of the administrative Office of Management and Budget as well as the non-political Budget Service under the United States Congress. Following the last data, the budget deficit in 2010 fiscal year should come to $1,35 trillion.

Having all differences in expectations, the fiscal deficit anyway will amount to 10% of the GDP. This index did not reach such a high level since the end of the Second World War. In 2009 financial year this indicator was at 9,9% of the GDP or $1,4 trillion.

Obama is trying to reduce the expenditure budget for three years by freezing some of the governmental programs, in order to save $20 bln. next year and $250 bln. - within the forthcoming decade. The President will also tell about it today. However, all suggested measures are not enough to reduce the budget deficit to 3% of the GDP, this level is recommended by major experts.

Today the market participants are waiting for the announcement of the US Personal Spending and Personal Income data and for the Construction spending readings. ISM Mfg business index will also be released today.

Best regards,

Analyst: Nataliya Grigorjeva.