"No matter how far you have gone on a wrong road, turn back." - Turkish proverb

FOREX MARKET
Lately, the EUR/USD faces high volatility as major news keep on boosting the forex markets. In late Thursday European trading the dollar rallied bellow 1.2800 support zone on back of sharper than expected narrowing US trade deficit for September. But this upside move of the USD seems to be its last throb, at least on the short run, as US Initial Job Claims dropped sharply as well as the Consumer Confidence figures. However the big hit against the greenback came from China's central banks governor who declared that they intend to diversify their USD 1 trillion foreign reserves. Therefore, the euro skyrocketed and broke all minor resistance levels reaching 1.2900 zone, a two-month's height.
Romania's headline inflation slipped to 4.8% in October, due to the acceleration of disinflation process combined with the favourable base effect. The CORE2 inflation rose by 0.53% in October, due to the high pressures induced by boosting consumption. In October, CPI advanced by 0.21% m/m, as fuel and some of the food and white goods prices decreased during the month. All three categories of goods posted increases during the month, especially the service sector which contributed by 0.16%.
On November 9th, the Romanian currency firmed slightly on back of bullish regional mood of investors, boosted by intensifying uncertainties regarding the greenback. However, the high demand for euro coming from importers offers strong support for the pair at 3.5020 level, which could not be broken for the third day in a row. Afterwards the pair stabilized in the 3.5030-3.5050 zone and remained steady for the rest of the trading. On Friday, the domestic market opened at 3.5040 level, with bids dropping until the same 3.5020 level in early trading. However towards noon, RON weakened slightly against euro, as the pair climbed until 3.5130 level. It seems that the robust hard currency inflows determined by investment projects prevented the depreciation of the RON despite worsening trade balance.

MONEY MARKET
The overnight deposits are traded for 8.5 bids and 9.1% asks on the interbank market on Friday. The NBR cancelled its three-month CD auction, as the offer of the commercial banks did not meet 75% of the mandatory allotment ratio. NBR's Administration Board is holding monetary policy meeting today, but we expect the RMO and intervention rate to be maintained at the current stance.