EUR/usd
On Friday a decisive move was done. Having summoned their strength, the bulls defeated the bears and broke through 1.34. Then, after some consolidation, the upsurge continued. As a result, on Friday eurusd reached the high of 1.3478, the daily low then made 1.3348. The growth was partly boosted by positive Ifo Business Climate in Germany. Again and again we see that indicators show better rates, which promises a higher business activity later in the year. Last week started with the improved ZEW data, which were followed by favourable PMI and at the end of the weak by positive Ifo stats. Both Current Assessment and expectations indexes have improved – the former from 107.1 to 108, the latter from 98.0 to 100.5. By the way, the expectations index has been in the growth phase since October and it's the first time it got above 100 since May 2012. Apparently, improvement in the periphery markets produced a very positive effect on the business sentiment. This means that in the coming few months it may develop into better growth conditions, if there are no unexpected crises here. Another reassuring fact is that the number of claims for early repayment of LTRO loans amounted to 137.2bln instead of the expected 84bln. The stats on the US new home sales for December are a bit disappointing, though not without reason. The preceding November statistics have been revised up to 398K (growth by 9.3% m/m) after which a correction is not surprising. Annually the index has grown, for the first time after the global financial crisis. We have already mentioned about the trend for reversal in the housing market, so it's not new to us. Now it's important to concentrate on other indexes – apart from unemployment claims and home sales, consumer sentiment and job growth should be also in the focus now.
EUR/GBP
No surprises from the British economy. According to the pre-estimate published on Friday the economy shrank by 0.3% against the expected decline of 0.1%. Besides, the annual growth rate has been zero for two quarters in a row. Since investors' interest in the euro is growing, the sterling is getting more and more sensitive to the weakness of the domestic economy. EURGBP reflects this fact especially well. It got above the highs of 2012 very easily and quickly on Friday, last night the growth continued. Now trading is held at 0.8535. The immediate possible target is 0.86.
USD/JPY
The Japanese yen hit a fresh 2 ½ -year low against the dollar. It spurred growth of Japanese exporters' stocks, but since then the Japanese currency has been consolidating a bit below 91.0. usdjpy has been growing for the last three weeks, but market participants start taking their profits more and more often. At the time of profit-squeezes and drops it is good to buy aiming at new highs.
USD/CAD
The canadian dollar has gone through a heavy sale on Friday after the release of inflation stats. Last week was not very lucky for the Loonie's buyers. The BOC's revision of its expectations pushed usdcad to the parity and the decrease of consumer prices in December by 0.6% m/m against the expected 0.2% made the Canadian currency even weaker. The pair looks overbought, but we say it again – don't try to stop the train running down the full speed.
