Again at the crossroads


Monday didn’t abound in news, so closed the day just where it started it, i.e. remained at 1.3350. The movements during the day were petty and of speculative nature and therefore can be ignored. The only stats deserving attention yesterday were those on the EU current account, which in December shrank a bit more than expected to 13.9bln against 15.9 a month before and the forecasted decline to 15.3. Anyway, with a broader view of things last year seems to have been quite favourable regarding the zone international trade. It was largely due to depreciation of the single currency in the first half-year. As you remember, the euro’s decline to 1.20 happened when the periphery was in big trouble and Germany, on the contrary,  was doing well, getting new orders and creating new jobs. The euro’s decrease temporarily supported exports and  the ECB, probably,  helped to reverse the situation in the banking sector. For the first time since 2007 (except for one case in March 2011) the monthly volume of  bad loans in the Spanish banking sector  reduced. More so, the decrease was almost by a percent, to 10.4 from 11.4%. Anyway, we shouldn’t be very optimistic about this. The situation is very far from being steady. Before the crisis this indicator had been at 1%. Today the ZEW Economic Sentiment is of interest. Last month this indicator all of a sudden grew, making us reconsider our attitude to the economic activity in Germany. This month analysts on average expect growth from 31.5 to 35.3. If their prove to be correct, we may count on strong economic data in the first quarter. In theory it may spur growth of the euro.


Absence of news is still not a reason to sell the euro. However, it is the reason to sell the . Yesterday the currency was in the downtrend and at some point dropped to 1.5436. Yet, upward retracements are possible even in the descending trends. One of such may happen today or tomorrow. Its target may lie at the resistance level of the downtrend.  At the moment it is passing through 1.5680, however by the end of the week it is likely to go down to 1.5620.


The  negotiations  still seem to have affected the Japanese officials. Finance Minister Taro Aso  said that he didn’t consider purchasing foreign bonds in the near future. What we heard before was just a mere enumeration of possible measures. As a result, has again dipped below 94.0. Now it is trading at 93.70.

Oil is back again at the lower bound of February’s trading range. Its price has gone as low as 94.50 per barrel of WTI. The oil bulls needn’t sound the alarm. The stock exchanges are doing quite well. Economies are growing and even better than a year ago according to G20. Thus, the current situation can be described as profit-squeeze after a futile attempt to break above $98.

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