U. S. Dollar: To win the battle is not to win the war - 28.11.2011

US Dollar The dollar captured 79.6 at the closing of Friday trading session, showing 79.75 at the level of 2 months maximum. Power of the dollar is primarily due to the weakness of European currency and by decrease in the purchasing power of the Yen after the statements by the S & P agency of a possible lowering of the highest sovereign credit rating. It should be noted that achievement of maximum values was possible in a relatively "thin" market, caused by two days of American holidays. Weather the greenback will continue its victorious march, or actual American problems (which may cause another wave of quantitative easing) strike ahead, we will see in the beginning of the week. Anyway, overcoming the figure 80 by the index is seen, but will it be possible to stick higher? That is the question. Euro Euro - crisis keeps running high. It is time for Europe to take all the necessary steps to fix it. Agreements reached at the EU summit in October, are not enough. Too little too late. That is what the world opinion is about intentions by the EU to save its currency – both, the final and the previous ones. Moreover, there is the reason to believe that in the foreseeable future will not change even after the recent G20 summit. There are no optimistic reasons as before. The bond market is held on "parole" of the ECB, the Eurozone money market looks frighteningly alert. "Flee" - this is the new motto for Europe, and it refers not only to banks and insurance companies that sell bonds bustling rush of southern countries, but also to common owners of bank accounts. Banks and regulators have paid attention to the fact that concerned citizens are trying to withdraw money from savings accounts. Capital flight from Italy, Spain and Greece is gaining momentum. Since the crisis, the Greeks withdrew around 50 billion euros - a fifth of the total deposits from their accounts. Naturally, in such a background, the euro lost on all fronts against the dollar giving away the important level 1.34 and closed the week at 1.3230. It is hard to believe that the upcoming week is able to reverse the trend. Fighting for 01/03 is to be expected this week. The current rebound in the near 1. 33 due to rumors that as so the European countries agreed of the key parameters for expanding the EFSF stability program. Japanese yen. It seems like the intervention of the Ministry of Finance and the Bank of Japan took effect, the Japanese currency weakened by the end of the week against the dollar to 77. 7, staying sustained by the crosses. Investors are still considering the yen as a "defensive" asset, although not as reliable as the dollar. But it is worth paying attention to the fact that Japan's stock market storms annual minimums, rating agencies are looking at a record sovereign state debt, the official Tokyo is fighting its own currency. We recommend a cautious approach to investments in the Japanese currency.