EUR/usd
CBs are again playing giveaway. draghi has repeated that the Bank is ready to help the EU economy before French Assemblée Nationale. He also specified that supporting of the economy by all the measures ,”which the ECB will see proper”, doesn't contradict the price stability mandate. It's interesting to see how the approach has changed – before Draghi the ECB refused to do anything that wasn't in complete agreement with the mandate. In our opinion, the reason for that is in a better situation in Germany, which doesn't suffer that strong growth which was a couple of years ago, with a smaller inflationary threat. The Fed's members (yesterday it was Jeffrey Lacker) try to curb expectations of the coming and inevitable shrinking of the Fed's balance. Curiously enough, poor US statistics proves to be very helpful here. Eventually we get such an unusual reaction of the market as yesterday. The final GDP estimate for the first quarter came out with an unexpected revision from 2.4% down to 1.8%. However, this negative news only spurred the stock markets. Players even shut their eyes to the fact that America “owes” such low rates to poor corporate incomes. So, who wins in this game? Now we clearly see reaction to weakness of the single currency. The economy, of course, is weaker than expected, but still stronger than many others. Also note that Lacker said that it was not the right time for cutting the Fed's balance, but at the same time he didn't mention that it was necessary to extend it further.
GBP/USD
Yesterday the sterling suffered even more than the euro. Chancellor of the Exchequer Osborne can hardly be blamed for it as in his speech he didn't say anything about new cuts of the budget deficit, but just pointed at the redistribution within the current budget limits. Our attention was attracted by the financial stability report, presented by the BOE a bit earlier yesterday. It suggested easing of the capital adequacy rules for the banks. The European banks are required to meet the Basel rules by 60% by 2015, while the British banks already now have tougher restrictions (>100%). The Financial Stability Committee offered to lower this level to 80%, which should boost lending in the country. Let's see what will come out of it.
AUD/USD
Australia is to hold parliamentary elections only in autumn, but already yesterday this cost Gillard the post of Prime-Minister. Trying to increase its chances in the upcoming elections, the ruling party of Labourites elected Kevin Rudd as their leader (he was Prime Minister three years ago). Now the analysts don't believe in the victory of the party in the elections. Probably, this is why the aussie has slightly changed on this news, continuing to fight for 0.93.
USD/CAD
Yesterday gold fell below 1220 and now is trading at 1240. The decline this month resembles the fuss at the exit out of the burning building. But it's really remarkable that this sharp decrease in prices of the commodity has almost no impact on such commodity currencies as the Aussie and the Loonie. The latter, just as we expected, is appreciating, moving away from the yearly highs. And in our opinion, this trend will hold for a while.
