2 in April almost its highest level for 10 years

The single currency broke a new annual record yesterday at the meeting, 1,4331 dollar. The euro is enjoyed while 1.21, continuing its rise against the greenback for the fourth straight session. The European currency is changing its earlier since December 2008. Tuesday, the economic news from the Continent were however not likely to cause this movement: the euro-zone unemployment rate rose to 9.2 in April, almost its highest level for 10 years. As the previous days, the trend on the foreign exchange market was in fact referred by the dollar.

The effective exchange rate of the dollar which compares the dollar in the six major world's currencies fell to 78,43 the lowest of the day, down 0.9. He must go back to September 22, 2008 to observe lower than parity. "The market expresses his fears about the crisis exit strategy in the United States and the possible return of inflation", summarizes David Deddouche, in Société Générale.

Many questions

Improvement of indicators in recent weeks, including the ISM manufacturing and consumption of household Monday maintains the idea that the recovery is in sight and thus raises many questions about the Federal Reserve. The market is concerned about the ability of the Fed to rapidly resume the massive liquidity it injected out of the crisis. The swelling of its balance sheet, the monetization of debt feed fears of inflation reboot, as evidenced by the recent very strong tensions on long rates.

"In addition, a debate on inflation in the United States target has emerged recently a former from the IMF stating same would cover 6 instead of the current implicit target of 2", noted the strategist of the Société Générale.

In this context, the words of Ben Bernanke, the pattern of the US Central Bank, are followed closely. Little disert despite tensions bond last week, it could now give interesting clues in his speech to the Congress.

"The foreign exchange market is currently frequently hosted by news about the inability of the United States to honor its debt and the risk of loss of its AAA rated, adds team Dresdner and Commerzbank. There are also new discussions sur output of some Arab countries, including the Qatar, the system of indexing to the dollar if it wanes.

A reversal is possible

Even though these two arguments are challenged, they reflect confidence that flickers. Speculative positions measured by contract term showed also that market is currently $ seller.

However, this environment is likely to return if the belief of investors in next resumed crumbles and stock markets correct part of the spectacular gains made since March. The dollar indeed posted a fairly clear (reverse) correlated with equity markets since the crisis.

In other words, the renewed appetite for risk is translated by a disaffection for the greenback. One of the major catalysts for the week will be, Friday, the monthly employment report in the United States. Disappointing figures could undermine ambient optimism by boosting fears of a permanently weakened US consumption. In this case, paradoxically, the dollar could regain the favour of currency traders.