Analysis

	Currency Market Summary for the week of October 15th – 19th, 2007.

The Canadian dollar continued its strengthening with the high of 0.9634, which was inspired by high crude oil prices and economic statistics from Canada. A correction to 0.9750 and 0.9820 is not likely to result in a long-term turn and as long as crude oil prices are higher than 80 dollars per barrel, the rate may come close to 0.95. The American dollar outlook remains dim. The doubt in the American economy s getting stronger as the negative corporate reports and economic statistics continue to emerge. The steady Euro strengthening from 1.3360 to 1.4350 since mid-August brings controversial comments of officials and economists. For instance, N.Sarkozy, French President, has more than once stated his concern about such a high rate, which he reasonably considers unfavorable for European exporters. However, over the last few days the concern was caused by China for keeping the yuan rate low. It is clear, especially after the Group of Seven meeting, that the European financial authorities are not ready for market or political manipulation with the Euro rate and this situation will remain until this rate has an obvious negative impact on the economy of the European Union. According to the IMF forecast, the world economy will slow down, which can respectively result in decrease of demand for crude oil and other resources, but whether this will have a good effect on the dollar is still a big question. The USA FRB meeting planned for October 31st may clarify the situation. If as a result of such meeting, the rates are reduced by a further 0.5%, the Euro rate will leave 1.44 behind and the pound traversed will overcome 2.0630. For the yen the key levels are still 112.80 and 112.30, below which the support for the dollar can only be 111.60 - this summer low.