EUR/usd
Are there many retailers remaining in the ranks after yesterday's speech of draghi? Probably, only those, who have a year or so of experience in trading payrolls. This is the common case there: a 100bp thorn in one direction and then a sharp reversal down by 200bp. Yesterday the markets did a greater job. The euro/dollar was purchased after sell-offs on the Fed's meeting minutes, so the pair managed to grow from 1.2220 to 1.23. Some traders staked on the probability of the rate cut by a fourth of a point, so the message that the rate was kept unchanged was met with purchases of the single currency, lasting for the first five minutes of Draghi's performance. Over this time EUR/USD flew up to 1.24 and then rushed down. The difference between the daily high and low makes 255 pips and 3 hours. The main disappointment is that behind the words ‘we'll do whatever it takes to protect the euro' people saw the opportunity to go beyond the ECB's mandate, but yesterday Draghi emphasized that everything will be done ‘within the mandate'. It seemed that Draghi sounded somewhat angry. He again addressed the governments, urging them to take their part in the improvement of the current situation. Also Draghi said that he was surprised at the violent reaction to the news about a banking license for ESM. He reminded that it is not the ECB that issues the license, this decision is taken by governments and other institutions. The ECB is to decide whether to accept ESM as a suitable counterparty and the current state of the fund doesn't meet the requirements. The series of disappointments was quite long, so it is not surprising that the euro should have fallen on Draghi's commentary. Immediate salvation hasn't followed. But the markets don't give up their hope, catching at the ECB's promise to develop nonstandard monetary policy measures in the coming weeks. Draghi also pointed out that the Bank would start purchasing short-term bonds to improve the situation in the markets, where premiums on some periphery bonds were growing high. As usual, Europe is bogged down in bureaucracy, being unable to respond to the rising problems adequately and on time and eventually having to pay a higher price afterwards. Thus, in the recent two days we've seen, first, the growth of the dollar on inertness of the Fed and then decline in the euro on inertness of the ECB. A curious coincidence: the next meeting of the fomc is scheduled for September 12, earlier in the month we'll learn the decision concerning the constitutional validity of bond purchases by EFSF/ESM. Today the markets are waiting for Payrolls, however there's hardly any liquidity left after yesterday's outburst in the markets. Be ready to see poor statistics (employment growth at >100K) and, as a result, purchases of the dollar.
GBP/USD
The British pound took yesterday's comments of Draghi less hard. Basically it is of interest that the sterling was growing very eagerly and didn't hurry with decline. GBP/USD fell down to 1.5515 by the end of Thursday's trading against the opening level of 1.5535. On the upward surge the sterling rose to 1.5678. The BoE also announced its decision yesterday, however there weren't any surprises. The programme size(£375bln) and the interest rate were kept unchanged. The BoE still has three months at its disposal to finish the current programme. And if the events don't unfold in a disastrous mode, the Bank will manage to avoid any action even in September.
USD/JPY
The dollar/yen keeps trading within the channel 78-78.50. The pair has been there for two recent weeks. Will today's payrolls have enough strength to move the market out of this corridor? Still we should take into account that the channel may be maintained by the Japanese Ministry of Finance. For this reason we recommend you to buy the pair on the dips close to 78 or on the breaks below this level.
AUD/USD
The Australian dollar failed to remain unaffected by yesterday's upward moves (AUD/USD was growing up to 1.058), but then formed the second bottom at 1.0450 (the first one was on the sell-offs after the Fed's meeting) and reversed up. Now the pair is at 1.0480 and if the markets don't resume declining today, we can expect another attempt to cross 1.05 and consolidate above this level.
