EUR/usd
Wall Street didn't manage to recover fully after Thursday's sellout. During the US session selling was still heavy as investors couldn't find any support in the fresh corporate reports. The disappointment with the indicators of technology companies spread to other sectors as well. Actually, the reports fall short of the investors' high expectations, which picture them strong enough to justify the overrated stocks and fight the negative consequences of the Fed's policy toughening. Already now the bonds are increasing their yields, which makes them a bit more attractive, depriving the stock market of the growth potential. The single currency seems to be immune to such processes, but in the end it also couldn't avoid the effect of investors' cautiousness. On Friday the pair twice rose to 1.39, but stumbled over selling and closed the day at 1.3880. This morning was opened with a downward gap and the low of 1.3841 as the markets were taking their lead from the words of the ECB member about the QE ‘plan'. Making a speech at the IMF conference, Benoît Cœuré said that the Bank could purchase government and private debt securities with the maturity of up to 10 years. Yet, a few more factors should be considered here. As reported by other members of the governing board, the further incentives will be introduced only in case the inflation forecast, which now promises a long period of slow price growth, worsens. However, the first step on this way will be interest rate cuts rather than QE. But it shouldn't be treated as a settled thing as the Australian member of the ECB, Nowotny, even mentioned that the inflation forecast for the region might be revised up in June. Thus, we still don't have any clear idea about the next step of the ECB, which will only intensify the markets' nervousness in the coming weeks. But upon the whole we stick to the opinion that the US dollar has the considerable growth potential and can use soon as the eurozone seems to be already losing growth momentum.
GBP/USD
The sterling hasn't lost its correlation with stock markets and for this reason on Friday suffered selling and fell down by 70 pips off the daily highs. The cable didn't manage to hold out above 1.6800, hit on Thursday, and has pulled back to 1.6720 by now. But if on Friday the weakness could be attributed to Friday's correction, absence of growth today speaks already about difficulties with searching of buyers due to selling in the stock markets. The British domestic data seem to be unable to snatch the pound from the claws of the total bearish trend, albeit short-term.
USD/JPY
The Japanese yen is still unable to move off 101.50 due to the decline of stock indexes and the stronger geopolitical tension around Ukraine. Besides, investors are losing hope in the extension of the stimulus package by the BOJ in the near future. The Bank's recent comments have reflected confidence in the strength of economic growth and the economy's ability to survive tax increases. Investors, on the contrary, have serious doubts about this.
At the time of the last local correction of stock exchanges S&P 500 lost a bit more than 6% off the preceding high. The same depth of the correction will be reached if now the index goes down to 1775, as the high was at 1892. Now trading is held at 1810. However, most commentators speak about a deeper correction, by 15-20%, which promises decline to 1515 -1610.
