Analysis

	Currency Market Summary for the week of January 28th – February 7th, 2008.

The USA FRB reduced the rates by 0.5%, which was welcomed in the stock but not in the currency market.  The dollar tested the lows with Euro and gradually started strengthening.
The previous summary mentioned the unstable position of the British pound, which was confirmed last Friday. The rate dropped 300 points from 1.9940. In view of expected rate drops, the pound will continue falling. Now it is traded at 1.9409. Today the rates were reduced by 0.25% and the accompanying statement by the Bank of England did not make dollar bears more optimistic. The pound is becoming cheaper.
The European Central Bank left the rates unchanged. That, however, did not prevent the European currency drop from the last week’s high of 1.4950 to 1.4489. The dollar strengthening trend is being discussed again.
The previous summary also mentioned a possible rise of the US DJPY pair to the high range, i.e. 107.80. The Tuesday high was 107.75. So far the rate is in a narrow range of 105.70-107.80.
The Canadian dollar again gave in parity rate to the US dollar, which significantly increased within the last few days – from 0.9872 to 1.0130. The goal is 1.02.

The market reacts to the further weakening of the US monetary policy, but in spite of that, the dollar is gaining value.  This tendency will not surprise those who are familiar with the economic history. Every time the USA undergoes a recession; the dollar is rising against other currencies.