EUR/usd
As we mentioned yesterday, at present the markets enjoy good news. Yesterday the single currency managed to break through 1.30 since Merkel's party, CDU, supported the plan to grant Spain a precautionary credit line to the rescue fund. In itself this event doesn't imply any money allocations to the country or any other expenses, however already now we can see the effects. The yield of the government debt securities has gone down a bit. Then it was reported that Moody's had decided to keep Spain's rating at Baa3. This is the lowest investment grade. Anyway, it's good news that there's no negative. EUR/USD jumped above 1.31, hitting the daily high of 1.3123 during the Asian session. Since then the pair has seen slight profit-taking, which has driven the pair below 1.31. However, it shouldn't be a cause for concern, as breaking through 1.3060 in itself is a good signal for the bulls. Apart from the EU news, the good demand for the risky assets and, as a result, selling of the dollar was spurred by the victory of Obama in the second TV debates with Romney. If Obama takes the lead in the pre-election campaign, it may put a pressure on the dollar due to good demand for risky assets. Romney is considered to be a strong advocate of the fight with the budget deficit and this can spill over into spending cuts and growth slowdown, which is always unfavourable for stocks and commodities. Apparently, the bulls managed to turn the situation in their favour. The level of 1.3120 remains an obstacle. However, we believe that its breaking is only a matter of time.
GBP/USD
In comparison with the dollar the British pound feels quite good, but is depreciating against the single currency. It is not a surprise as the major news and risks are now concentrating not on Britain, but on Mainland Europe. Even the numerous statistical data for Britain don't have much impact on the lack of attention. Probably, today's employment statistics and the minutes of the October MPC meeting will have more chances to make the sterling live its own life. Technically, the currency is far from the local highs in GBP/USD, but is testing the 200-day MA in EUR/GBP. Consolidation higher in the latter pair will be a sign of the chronic lag behind the majority of other currencies.
USD/JPY
The weakness of the dollar, which showed up yesterday, affected even USD/JPY. The bulls weren't strong enough to turn the growth of risk demand in their favour and drive the pair above 79.0. At night there was a reversal slightly below this level and by closing of trades in Tokyo USD/JPY dropped already to 78.60. Those, who were buying the pair on the expectations of the inevitable interventions, must be really disappointed now.
AUD/USD
In the struggle for 1.03 in the aussie, which was lasting for more than a day, the bulls gain a victory. The growth of stock exchanges, strengthening of the euro and less concern about hard landing of China told favourably on the currency, boosting its growth. The reversal up from 1.0160 can be considered as accomplished. The next magnet level is 1.0340, where the 200-day MA is now passing. And further is the corridor peak of 1.06.
