Our main expectation is that the Greek parliament will vote "Yes" to the austerity package this evening. With that package passed, the Eurogroup meeting on Monday will be able to set out the longer term plans for Greece and release the next tranche funds.
Since yesterday morning, especially if we look at EUR/USD, we can see a very narrow sideways trading range. To my mind, it looks like everybody expects Barack Obama to remain president; thus that has been priced in. Currently it seems that the elections are not putting too much uncertainty into the market.
Market participants have been expecting that the Fed would determine an additional QE (Quantitative Easing) in December, hence USD/JPY would trade below 78.00.
I would say that USD/JPY has been in a pretty rangy trading for quite a while, while EUR/JPY is more or less driven by the move from the Euro side.
In recent weeks the Australian Dollar has been fairly resilient against both currencies.
I would describe the current economic situation of the US as that of limping along.
I think the market is long on the currency pair due to a couple of reasons. The main issue is obviously the weakness of the greenback, given QE3 and the fact that the ECB has officially decided to launch the OMT programme, which will help Spanish and Italian bonds.
The political game played in European Union at the moment is a "give and take" game.
I think these better-than-expected U.S. numbers will lead to the higher U.S. yields and eventually to higher USD/JPY rates.
Arne Lohmann Rasmussen, Head of FX Strategy at Danske Bank, and Georgette Boele, Head of FX & Commodity Strategy at ABN Amro Bank, on EUR/USD
South Africa's Rand is a commodity currency, thus the global growth outlook and commodity cycle will typically be principle cyclical drivers of the currency.
The Dollar has been weak since the end of August, when the Fed Chairman Ben S. Bernanke made it clear that further quantitative easing was in the pipeline, and there were increased incentives for US investors to move money overseas.
That is surely a contentious issue right now, the Dutch disease debate. Mark Carney, the governor of the Bank of Canada, about two-three weeks ago, made a speech specifically addressing that issue.
The Rouble performance for the last, let us say, one-two months was relatively good, but after the QE3 announcement by the Fed, the currency appreciated very sharply.
This asset-purchase programme has been around for quite a while, this is actually the 7th time that the Bank of Japan expanded the asset-purchase programme and from what we have seen in the past, Japan is still facing deflation.
In fact it is unlimited and coupled to fundamental aspects of the economy. The Fed has clearly said that the unemployment rate is too high and the policy makers are willing to purchase $40 billion worth of mortgage-backed securities to stimulate the economy, and to bring down financing conditions as long as unemployment rate has not come down substantially.
If they do not, the Euro will move back, probably below 1.28-level. If they do, I think the market will attempt to take EUR/USD to a 1.30-figure.
As the Swiss economy weakens and deflation gets established in Switzerland, the Swiss Franc will weaken on its own accord, particularly if the recent ECB's bond-buying policy is successful in stabilizing the Eurozone
It is pretty much pre-announced that they are going to engage in conditional bond-buying, meaning that they are going to buy the bonds of some European countries. That is contingent upon these countries, which are applying for Troika's financial support that is seeking a conditional aid-driven programme.
Technically it is justified, because if components of the European Union, including the most important and healthiest economies such as Germany, the U.K., and the Netherlands get a negative outlook attached to their triple A rating, then it is logical that the EU will also get such a negative outlook. Thus, from the technical point of view I can understand
It was a very slight disappointment. In the run-up to Ben Bernanke's speech, EUR/USD gained some ground.
Representatives of the European Commission, the International Monetary Fund and the European Central Bank, also known as Troika, are currently evaluating Greece's efforts to revive its economy and will report back on their findings in early October. Dukascopy Banks SA interviewed David Kohl, Deputy Chief Economist at Julius Baer Group, to find out his expectations concerning the Troika's report.
The Japanese government downgraded its economic assessment for the world's third-biggest economy. Junko Nishioka, Chief Economist at RBS Securities Ltd, provided her insight into the reasons behind this decision, her expectations concerning possible BOJ actions, and outlook for the Japanese economy.
After 18 years of negotiation, Russia eventually joined the World Trade Organization on August 22 and became 156th member. Dukascopy Bank SA conducted an interview with Vladimir Osakovskiy, Chief Economist at Bank of America Merrill Lynch, to find out the reasons why it took so long for Russia to join the WTO and what are the benefits of membership both