FX.co ★ Fundamental review of Forex market for 21.01.2010

During Asian session on Thursday, the US dollar gained further against major currencies, although investors did not mind to buy risky assets, as the Australian dollar, being under the impression of the accelerated extension of the Chinese economy. Yesterday, the EUR/USD currency pair closed at the mark of 1.4107. The highest level was 1.4289, the lowest – 1.4079. China unexpectedly reported about the GDP growth by 10.7% in the fourth quarter, compared to 8.9% in the third quarter; and the tightening of the monetary policy. The PRC demanded the largest banks to curb their lending because of the sharp increase in lending volumes during the first weeks of 2010. “A gradual tightening to prevent bubbles will positively affect the economy in mid-term and long-term outlook. However, as the biggest world economies are still painfully trying to determine terms of exit the anti-crisis programs, fears regarding the Chinese monetary policy influence on the global economy in short-term outlook can appear”, said Jun Kato, a senior chief analyst at Shinkin Central Bank Research Institute. On Wednesday, the White House invoked the US Congress to permit the administration to exceed the allowed public debt amount of $12.4 trillion so that it could continue to lend funds. The Congress regularly has to lift debt ceiling. Department of The Treasury will exceed December during several weeks. Today Barack Obama’s, the president of the USA, speech is expected at 7.40 p.m. GMT+3, after his meeting with Paul Volcker, the ex-president of the FRS, at present, heading the Economic Recovery Advisory. Volcker supports the contraction of large financial companies to sizes, within which they will not be able to make damages to the economy. The White House considers that people, who in chase of profit put money into speculative operations, concerned high risks, are responsible for the financial crisis of 2008. In the result, the US government had to save banks from the bankruptcy at the budget expense, having devoted $700 billion for bailout to financial institutions. Today, the market focuses at the release of a big number of the macroeconomic statistics. For now, the tendency of the greenback strengthening is remaining.

Regards,
analyst: N. Grigorjeva