Yesterday, the greenback fell to a record low against the EUR on the back of the Growth Fed Outlook index....

... It dropped down to a new low against the EUR on Thursday after the EUR currency broke through the $1.43 mark on reports from Washington that growing economic weakness was increasing jobless claims, and at the same time The U.S. currency fell 0.9 percent against the JPY touching 115.29, the lowest since Oct. 2.


This unexpected jump in the number of workers filing new claims for jobless
aid is an additional signal of the continuation of the weakening US labor market.
The Labour Department said that the new claims for unemployment aid climbed by
28,000 last week.


Also yesterday a separate report showed that the Bank of America's third-quarter net
income fell to $3.7 billion, its Revenue fell 12 percent to $15.93 billion and its
shares had fallen 6 percent this year. Bank of America said it placed aside $2.03
billion for credit losses, up more than 73 percent from a year earlier, and
nonperforming assets doubled to $3.37 billion. It mentioned that the weakened
housing conditions were mainly responsible for some of the increases.
Also the corporate and investment banking profit dropped by 93 percent to $100
million from $1.43 billion, hurt by $717 million of the trading and sales losses.

At the moment the global investors are divided as to whether the Fed will lower its
key interest rate in its next meeting on Oct. 30-31. Concerns about the outlook for
the U.S. economy have increased in the last few days with the weaker-than-expected
US currency. On the basis of this major event many investors have increased their
speculation whether the Federal Reserve will cut interest rates again in order to
shore up the economy.

* EUR
The EUR has reached fresh record highs against the USD in recent weeks, and
especially yesterday. The single European currency rushed forward and past the 1.43
per dollar level for the first time. Many analysts believe that the string of weak
economic release on Wednesday added to the greenback's woes.

As it has been forecasted by different central banks, the 13 nation currency's rise
against the greenback and Asian currencies has begun to damage exporters and is
likely to create a long term negative economical impact on the Eurozone's economic
development. It is expected that the EUR's economic growth will slow as a result of
the fallout caused financial market chaos which especially hit the housing markets.
Europe has begun to realize step by step that the housing markets in some EU
countries are more over-valued than in the United States, so it can be develop into
a serious risk for the Eurozone economy.

In order to deal with this major issue, Europe is going to take a firm position on
foreign exchange rates when it will meet today (19/10/2007) at its G7 partners
meeting in Washington. The G7 consists of the United States, France, Japan, Italy,
Canada, Britain and Germany. The European Central Bank will consider cutting
interest rates, while there is also advice that it must stand ready to stiffen
policy in case growth increases. In addition the ECB will address liquidity
conditions and the role of credit-rating companies.

* JPY
Yesterday the U.S. currency slipped by 0.9 percent against the JPY reaching the
115,15 level. It earlier reached 115.29, the lowest since Oct. 2, as it looks at the
moment, the Japanese currency has still a strong momentum to carry on and to
continue to rise against the 16 most activates currencies which it is being traded
against. The weakening trend of the greenback against the JPY is likely to go a bit
further as the market increases its expectations of a U.S. interest rate cut, and it
is believed by the major banks that the JPY will rise to the 112 level against the
greenback by the end of the year.

The JPY rose to 164.65 versus the EUR, rising from the 165.30 level late yesterday
in New York. Against the greenback, the JPY stabilized at 115.15 from the 115.63
level. It is expected that today the JPY will rise to the 164 mark against the EUR.

In other news, Japanese stocks rose, led by a rebound in bank shares and gains for
high-earning trading companies. The benchmark Nikkei 225 rose 0.89 per cent to
17,106.09 while the broader Topix index climbed 1.09 per cent to 1,617.75.


Technical News
* EUR/USD
This pair reached a new all time high yesterday and it breached the key 1.4300
resistance level. The 4 H is giving a strong bearish signal indicating that this
pair should begin to make some downward movement. Today's target will be to breach
the 142.60 level, however there may still be room for this pair to rise further.

* GBP/USD
Both the daily and 4 H charts are bearish. This pair is deep in overbought territory
as indicated by the RSI on the 4 H chart. Bollinger bands are tightened indicating
decreased volatility. This pair is starting to head down and if the 2.0400 level is
breached we could see a sustained bearish trend develop.

* USD/JPY
This pair has been is been on a steady downtrend coming down from the 117.30 to its
current levels. There is also a distinct bearish channel that has formed on the 4 H
chart. All indications are that this pair has still room to move down.

* USD/CHF
This pair has now breached the bottom section of the bearish channel on the 4 H
chart. It broke through the key 1.1745 level which validates that the next move
should still be bearish. This pair is now targeting the 1.1700 level.


The Wild Card
* Crude Oil
The hourlies and daily charts are bearish. On the 4 H chart the stochastic slow is
crossing above 80, indicating that we are in overbought territory. Today will be a
good opportunity for
Forex traders to take advantage of a possible sustained bearish movement.


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