Democrats will this week working on the project

The dollar began the week in great shape. The euro has lost up to 2.69, to 1,3547 dollar, session and treated against 1,3618 dollar in the evening. Such a level had not been observed since the US Federal Reserve meeting in mid-December 2008. The US currency also gained ground against the Japanese currency, exchanging against 93,46 yen, or an increase of 2.29.

The dollar received a boost from optimism about the US economic stimulus plan (see page 7). Barack Obama, who must take his duties as President on January 20, has shown its determination to adopt an ambitious device. Democrats will this week working on the project. The total amount could approach $ 800 billion, which would make the greater plan of history. The democratic team wishes that 40 of the package apply to tax cuts, which would be favourable to consumption, engine of the US economy. These announcements have overshadowed recent statistics, including the figure of the ISM manufacturing, very low, published on the eve of the weekend.

The presentation of the monthly employment report, next Friday, will be a good test of market sentiment. Currently, strategists note a decrease in the risk aversion. The VIX index, which measures the volatility on us stocks, rose from 60 / month to about 40, from Société Générale.

Volatility

The dollar had benefited from this volatility after the bankruptcy of Lehman Brothers. The euro fell below 1.25, November 13.

The negative effects of the policy rate zero reintroduced by lower rates of the Fed on December 16 are beginning to be blunt. Eyes are now turning to the European Central Bank (ECB), which must render its verdict on January 15. "Lucas Papademos, known to be rather conservative in its comments, has been suggested that monetary policy could still be relaxed," said Barclays Capital team. Before the speech by the Vice-President of the ECB last weekend, the comments of the members of the institution suggested instead that a break was possible. In this context, and after a jump of 18 percent in December, the euro has also depreciated against the British currency yesterday, losing 3.42, to 0,9274 book. Parity was close last week: December 30, the euro broke a 0.98 book record.

Situation "of flattening.

Beyond the economic announcements, foreign exchange dealers try to get an idea of the investment flows that will affect the course of the dollar. "If investors follow the Fed and increase the share of their portfolio to the titles of mortgage refinancing agencies, the greenback should better be worn", j. Chris Turner, at ING.

The strategist also noted the correlation between a decrease in the gap in performance between State of short term and long term bonds and the dollar. In other words, if the "flattening" situation (reduction of the differential between the rates at 2 years and 10 years) to work for over a month continues, the dollar should benefit from. The appetite of foreign investors on us securities will play a decisive role. But China, currently in difficulty, can hardly renounce the purchase of these $ assets.