EUR/usd
The markets were quite brisk yesterday. Behind that again were Obama's comments on the fiscal cliff issue. The president urges to complete the deal before Christmas. And now it seems quite possible as one of the republican congressmen expressed his support for raising taxes for the rich, but on condition that the tax benefits for those who earn less than $250K a year will be preserved. Such news stopped selling of risky assets. In particular eurusd dropped as low as 1.2880 and by the end of the trading day had grown already to 1.2960. Now the market is trading in a quieter mode in the anticipation of other news releases. The absence of bad news for Europe was also in favour of the euro. Spain's retail sales and Europe's private loans proved to be very poor, but nevertheless exceeded the pessimistic expectations. The Spanish retail sales dropped by 9.7% y/y against last month's 11% and the expected -11.5%. Private loans shrank by 0.7% y/y in October – this is very poor, but yet better than the forecasted -0.8% and the drop by 0.9% y/y in September. Hopefully, the bottom of the downsurge has already been passed. The M3 Money Supply is showing a rapid pace of growth (3.9% y/y) against 2.6% y/y a month ago and the low of 1.7% last December. However, don't be too optimistic. Probably the best strategy now is to speculate for a short-term rise and further selling in case of another fruitless attempt to test 1.30. The US housing market seems to have stumbled at the end of the year. Last week it was reported that the number of building permits declined by 2.7% in October. Yesterday we learnt that the new home sales for the autumn months had been revised down and that in October new homes sold really badly.
GBP/USD
The British pound also grew on the increased demand for risk. However, the sterling again lagged behind the euro. Please note that this correlation is not typical. More often, the market growth is accompanied by higher demand for the sterling since capital flows to London. Now money is flowing there due to the aggravation of the EU affairs. The domestic macroeconomic statistics are now of little interest to the pound-traders. The leak of lending stats from the BOE (they were to be released only this morning) hasn't had any impact on the situation. The British prefer to cut the debt load. After the favourable statistics of September, when the net consumer credit made 1.7bln, the October figures demonstrated a decline by 0.3bln. Anyway, the further increase of mortgage approvals is encouraging. In October they grew to 53K against 50K a month ago and the June low of 44.4K.
USD/JPY
The alignment of forces in the yen was largely affected by the growth of stock exchanges, which supported usdjpy. The pair didn't reach our target of 81.40 and turned back at 81.70. Now it is already up at 82.10. It's not bad, however we still doubt the strength of the uptrend in the markets and the pair. Most likely, the purchases of dollars for yens will be triggered by the pressure put by the BOJ rather than by the positive performance in the exchanges.
AUD/USD
The Australian dollar preferred to stand aside from the market rally yesterday. Apparently, for audusd 1.0480 is a strong resistance since in the recent days the pair has bounced off it more than once. It will be interesting to watch the further development of events in the pair. Moreover, it is already rumoured that the RBA may cut the rate at the meeting next week.
