Dollar Analytical Review Of The Week 18-22 October 2010

As we expected the week before last week, the dollar‘s decline has stopped, and the dollar index was mainly in the lateral movement. On the week the dollar even rose slightly, US Dollar index closed at 77.47 points. It is too early to speak confidently about the beginning of an uptrend in the dollar, because
long-term trend remains downward, but the prospect of the next one to two weeks, we can talk about that further dollar decline is not expected. Everything could change if the results of the G20 meeting will be taken some important decision that will change the existing balance of exchange, but before the release of this information, we can not speak confidently about the outcome of the meeting “a big twenty”.

As a result of the week, most currency pairs have changed slightly, EUR / USD has remained virtually the same level as that was the beginning of the week – about 1.3950, AUD / USD, NZD / USD fell slightly due to increased dollar for the same reason the USD / CHF, USD / CAD and USD / RUB little rose, a pair of dollar-yen has remained virtually unchanged.

We should also mention the British pound, which fell markedly against the U.S. dollar, it has occurred under the influence of information about what the UK government is planning a significant reduction in social spending, the sharpest since the Second World War. Such a strong reduction suggests that the government believe weak economic growth, low tax revenues to the budget and that such unpopular measures as reducing sotsrashodov still have to implement, because significant economic growth is clearly not expected.

Schedule of the dollar index.

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Due to the fact that last week the U.S. dollar showed some growth, we observed a proportional decline in the value of “investment” of metals: gold, silver, platinum fell in price. Despite the decline in value last week, the long-term trend for these metals is rising, a small correction and lateral movement, which we have seen this week are a normal feature of any healthy uptrend.

Price chart of gold.

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Stock markets.

Stock markets remain in good enough shape. This week, stock indices showed regular growth. It is worth noting that the increase in share price came against a background of strengthening the dollar, which is quite uncharacteristic of the picture for the markets over the past few months. Trend in the stock market continues upward without any serious evidence that in the near future growth stalls or goes into a downward movement. The only possible reason for stopping the growth of the stock market may be continued strengthening of the dollar, because simultaneous growth and value stocks and the dollar index in the absence of real economic growth can not last long enough, this is only possible for a fairly short period of time.

Graph comparing the dollar index and the S & P500.

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The upper graph – the index of the 500 largest U.S. stocks, the lower graph – the dollar index.

Dollar:Volatility index $ VIX.

The index of volatility in recent times shows a bit chaotic, lateral movement, without any clearly defined trend. However, the index $ VIX below 20 are low by historical standards, suggesting that market participants do not see any reasons for the fall of the stock market in the near future.

Schedule index volatility, $ VIX

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dollar Analytical Review Of The Week 18-22 October 2010

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