Analysis

	World Financial Market for the week of October 22nd- 26th, 2007.

The goals of all these trends are 98 dollars per barrel, 800 dollars per ounce and 14.80 dollars per ounce correspondingly. The price growth is inspired by expectation of 0.5% reduction of the rate at the coming meeting of the USA FRB, on Wednesday, October 31st. Gradually caution will get the better of optimism and a small correction is possible just before these important figures will be announced. How deep the correction goes will be defined by the actual rates reduction. In case we see “only” 0.25% and an optimistic tone of the following comments, the correction scenario for a whole range of instruments - from currencies to metals and crude oil is quite probable.
There have been slight signals that the rates may be left unchanged till December. In that case the correction will be really deep and somewhat nervous. Volatility will raise to the August levels and the variation range will increase by 60% in comparison with the “usual” sessions. It’s necessary to point out that so far only the necessity of a technical correction is in favor of this scenario. The scarce economic statistics last week did not give grounds for reasonable forecasts on possible actions of the US monetary authorities. However, the data on the housing market were surprisingly good, which indicates that it is too early to assume a complete negative attitude towards this sector of US economy.
Though the information, in spite of surpassing all expectations, did not prevent the dollar from falling further. While all the world stock indexes are growing, the reserve currency number one serves as a basis of cost dilution. We see a typical inflation bubble. It will apparently still be growing for a long time, unless the FRB takes a different decision.