EUR/usd
The election celebrations at the markets didn't last a day. The US stock exchanges and risky assets which eagerly started to grow on the news from the political arena have sharply reversed. Moreover, the stock exchanges and commodities have sunk even lower than they were at the beginning of the rally. The market has quickly returned to its acute problems. The US Congress has come close to the “fiscal cliff” issue. There hardly will be an easy solution to it, especially with the current president, since the Congress is under control of the republicans. The major disagreement between the democrats and republicans is that the former don't want to cut spending and the latter are struggling against the tax increase for the reach. Thus, both ways to combat the deficit are blocked. Without an agreement between the parties and a long-term plan to curb the deficit Americans will face an automatic cut of spending by 600-700bln starting from January. The situation is aggravated by the fact that after the elections the House of Representatives has become even more polarized than before, so now the debates will be even fiercer and it will be really hard to achieve a compromise. America was not the only newsmaker yesterday. The euro was affected much by the news that the European Commission revised down the EU economic forecast for 2013. Now it is expected that the growth will make just 0.1% against the previous estimate of 1.0%. In other words we shouldn't expect that Europe will start to grow by leaps and bounds after the “slight recession” of this year. Moreover, yesterday the ECB's draghi noted that Germany was getting more and more exposed to the crisis. All this news gave rise to a serious selling in eurusd. From the daily high of 1.2880 the pair dropped down to the low of 1.2735. This is just the volatility level that we have lacked for so many months. The double top with highs around 1.3140 is getting clearer and clearer. In this case the euro's way lies down probably to the faraway 1.20.
GBP/USD
The pound also suffered from selling of risky assets, but upon the whole it felt much better than the euro. gbpusd managed to stay above 1.5960 and event tried to remain at the opening level of the day. Thus, the pound/dollar is still clinging to the support level. From a broader perspective we see that during the whole October the pair was going up after the attempts to drop lower. Anyway, if the euro still goes down the pound won't manage to hold out at the achieved highs.
USD/JPY
usdjpy also can't hold out at the reached highs. The risk-aversion for a while overshadowed the weakness of the yen in the anticipation of more active measures from the BOJ and the Finance Ministry of the country. However, it is necessary to be careful with selling of the pair. Already now it's possible to see that it is purchased on the dips below 79.80. It will be more reasonable to join the move down (if it comes in place) only after the break below 79.70. But even then you should carefully watch the market on the way to 79.30.
AUD/USD
The aussie is one of those currencies which remain in demand despite the overall flight to safety and liquidity. Last night the AU dollar was supported by the domestic news. The labour market all of a sudden demonstrated its strength. The employment grew by 10.7K in October. Yet, the part-time employment rate has been on the decline for three consecutive months and the full-time employment has been growing for the last two months. The unemployment level has remained the same, though it was expected to grow from 5.4% to 5.5%. This news helped the Aussie to return above 1.04. The currency has been gradually purchased for about a month, so now we can expect that if there are no big problems with the global growth, it will grow up to 1.06.
