Analysis

	World Financial Market Summary for October 8th- 19th, 2007.

Gold reached the price of 771 dollars per ounce. Crude oil was traded at over 90 dollars per barrel and these figures do not surprise anyone any longer. Due to a military conflict on the border of Turkey and Iraq they do not look excessive. But even under such circumstances corrections still happen. For gold 750 dollars per ounce looks quite reasonable, for crude oil – 82-85 dollars per barrel. The upper goals for gold are around 788-797 dollars per ounce and crude oil is not likely to cross 98-99 dollars per barrel within the next few weeks.
The fall of the USA stock indexes brings concern. The Dow index dropped by 2.64% and SnP by 2.56%. In general, the market is getting more and more concerned about the American economy perspectives, expecting a strong fall. Even the rate reduction at the FRB meeting on October 31st is not likely to improve the situation significantly. The continuous falling of the dollar against all the major currencies is a good confirmation of that. Quite strangely at the Group of seven meeting during this weekend no statements were made on the current situation. Moreover, the IMF Head, R.Rato declared that “the dollar is still overestimated in spite of the fall of the last few years". This news made the Euro grow to 1.4350 and the pound to 2.0560. The Japanese yen did not stay aside either, which strengthened significantly from 114.30 to 113.25. The folding of carry trade transactions took place at the same time.
Upon this approach the calls by the world leaders to China to revalue the yuan seem quite hypocritical. Its strange that the manipulations with the exchange rate are allowed only for one participant in spite of the interests of other participants in the global financial system.
We expect a declining of the stock indexes of Europe and Asia earlier in the week but by the end of the week some losses will be regained.  Significant changes are not expected before the FRB meeting on October 31st, except for the information on the labor market, which is likely to increase the markets volatility, but their general trend will be defined by the rates resolution.