Currencies React Sharply To the Plans of Central Banks - 22.10.2012

The victory of Spanish Prime Minister – Rajoy on regional elections in practice removes obstacles to request the financial aid. This factor today supports quotes of European currency that gains about 0,3% against greenback and it is traded at 5-months highs vs. Japanese Yen. Weakness of the Yen is due to negative export data for September as well as increasing speculations concerning the QE expanding program from BOJ at the meeting that will take place next week. On Friday we reported that in case EUR/USD does not get below the critical level at 1.2990, there is a reason to expect renewals to the previous peaks at 1.3138 and 1.3170. The scenario for the time being is realized (Friday growth~40 points), however it would not be superfluous to see the upper level breakthrough at 1.3075 as a trend confirmation. It is worth to note the sharp weakening of Canadian dollar in the USD/CAD currency pair. Many of market participants expect the monetary policy ease from Bank of Canada at tomorrow regulation meeting.

USDCAD, daily chart