Analysis

	Currency Market Summary for the week of February 25th - March 3rd, 2008.

The last week was marked with an important event - the Euro broke through 1.50 and soared to new heights. The growth is continuing without significant rebounds or corrections, which indicates that major players are supporting the trend.
Having reached a high of 1.5276 again, the Euro is on an upward trend for the next few days. By Thursday before the decision of the ECB on the rates, a repeated testing of this level is possible. The threshold level of the current and maybe future week is 1.5350. If the ECB reduces the rates and the speech of Trichet contains a slight hint of the monetary policy weakening, the correction to 1.51 and 1. 5050 is possible. The rate increase is not very probable in spite of the growing inflation in Europe.
With the extreme growth of the Euro rate, the pound did not manage to reach 2.00 with a high of 1.9970.  On Thursday the Bank of England is expected to make a decision on the rates, which will define the markets further development. In case of a rate reduction by 0.25% or more, the pound may drop to 1.9520. If the rates remain unchanged, a repeated testing of 1.9950 with an attempt to go above 2.00 is probable. The first option looks preferable.
The Canadian dollar is continuously strengthening due to the growing crude oil prices. The previous forecast was right – the US dollar fell against the Canadian dollar to 0.9750 and was lower than 0.9712. It was followed by a rebound and the current rate is 0.9915. The decision of the Bank of Canada on the rates is expected today, which will help the US dollar to get back to the par value. However, till Friday when Non-Farm Payrolls are published, it is most likely going to be traded within the range of 0.98-1.050.
The Japanese yen brought the surprise of the week, having gone within a short time from 108.20 to 102.60 yen per dollar. The global falling of the US dollar resulted in withdrawal of capital from carry trade and decline of the cross rates Euro-yen and pound-yen.
It may be seen as panic or may be defined as a willful deceit of investors, which have generously invested in the American economy last week. The borrowing amount was extremely high. Usually after such investments in debt securities the dollar strengthens, but this time the situation was the opposite. The Euro reached the 1.50 mark without any resistance.