Dollar is at its Maximum

Last week, yen overcame the mark of 111 for dollar for the first time in six years. That happened against the background of the decision made by the Bank of Japan regarding the increase of economy stimulation. This way, the monetary base will be increased to 80 trillion yens. Yen lost 2.1% last week
Last week, dollar reached its three-week maximum against main currencies. It was caused by unexpected growth of the US GDP in the third quarter, which is, again, a significant confirmation that the decision to stop quantitative easing program was rational. In general, analysts come to the conclusion that the US economy retains positive tendencies. Besides, a reduction in applications for unemployment benefits was noticed last week, which speaks of stabilization of the situation on the American labor market. There is a high probability that the process of interest rate increase will be launched by FRS in the middle of the next year.

With regard to the status of euro last week, pressure on the currency rate was noticed due to the publication of preliminary information regarding consumer inflation. The growth of the indicator fully meets the analysts' expectations, since prices for alcohol, food products, and tobacco products were raised. It can't be neglected that the European economy has been under significant pressure caused by the issue of reaching the inflation goals. The European Central Bank does not intend to make any cardinal decisions until its December meeting.

Last week was not positive for British pound either. There was not any recovery after fall, which was caused by the pressure of the general tendency of dollar strengthening; it overshadowed basically positive information from Great Britain and left it unnoticed. This way, real estate market demonstrates housing price growth. The representatives of the Central Bank think that the country does not experience strong inflation pressure, the economy growth is strong; however, recovery may be supported by the regulator. Last week, yen overcame the mark of 111 for dollar for the first time in six years. That happened against the background of the decision made by the Bank of Japan regarding the increase of economy stimulation. This way, the monetary base will be increased to 80 trillion yens. Yen lost 2.1% last week.

The trading week that began shows existing adjustments in dollar movements. Traders did not see any special reasons for a decrease of the American currency rate; however, the negative trade balance is growing. Meanwhile, euro found a reason for strengthening its positions - Mario Draghi (ECB President) may retire. In the meantime, on Tuesday, pound grew, although statistical information on business activity in construction area demonstrated slowing down. We can expect the movement of EUR/USD pair to 1.26 level in the case the reports on business activity in Eurozone even approach expected levels. The growth, possibly, can be short due to prompt publication of American statistics, which assumes new confirmations regarding the stability of the American economy.

Significant efforts will have to be made this week for the growth of pound sterling - the statistical data published by Great Britain must not only meet but will also have to exceed expectations. Exceeding the predicted levels can "move" GBP/USD rate to 1.6050 mark.

For USD/JPY pair, the task number one will be overcoming resistance level at 114.00. The further goal may be moving to 114.30. If the United States economy shows growth again, then, it is likely, that the stage of active growth will begin, and the pair movement will be targeted to 114.80 mark.

Author: Navsher Bartash,
ForexChief Currency strategist