EUR/usd
The single currency is cautiously crawling up. Yesterday without any particular reason and news background the euro rose by a point to 1.2370. At night there was a slight correction, which has already been fully recouped by now. From the EUR/USD chart it is clearly seen that at the end of the last week and at the beginning of the current one the euro touched the support line of the upward trend and went up. The range of this channel makes about 2 points. This means that the upper boundary is now above 1.25. For the first time in a long period the euro enjoys positive news from the fundamental side. The just published data on German GDP for the second quarter proved to exceed general market expectations. The economy of Europe's locomotive grew by 0.3% in the period from April till June. The GDP growth for the previous quarters has also been revised up – now the decline in the fourth quarter of the last year is estimated at 0.1% instead of 0.2%. Yet the annual rate of the economic growth without seasonal adjustment has slowed down just to 0.5% after 1.7%. The second largest economy of Europe, France, has also managed to perform better than expected. Instead of the forecasted decline by 0.1% q/q the economy has been stagnating for 2 quarters in a row. The growth against the second quarter of the previous year makes 0.3%, which is also very little. However, now the markets don't expect much of the suffering Europe. There's more and more evidence that troubles of the periphery are contagious and spread wider and wider over the core countries. It is already seen in the production and trade balance statistics (exports to the EU from the USA, China and Japan have shrunk by a whole quarter in some cases!!!). One more comparison: last week's data showed that the US economy grew by 0.4%, but annually the growth makes 2.2% against the level of the previous year. But we will dance until the music stops and therefore now expect to see further appreciation of the single currency on the release of EU GDP statistics, which may prove to be beyond expectations and disperse the concerns about the economic situation in the region for a while.
GBP/USD
Once again the sterling stopped on the way to 1.57. The bulls crossed that level a few times yesterday and this night, but still didn't manage to launch the offensive. For the sterling, which is very sensitive to macroeconomic statistics, the CPI release will be of great importance. The markets expect that the index will show the third month of decrease in prices (this time by 0.1% monthly and 2.3% annually). This is the lowest level since November 2009. The deviation from the forecast may cause fluctuations in either direction. Besides, at present the chances that inflation will be overestimated or, on the contrary, underestimated are equal.
USD/JPY
The absence of changes in the policy of BOJ doesn't mean that there are no discussions. As seen from Monetary Policy Meeting Minutes, in the opinion of some members of the committee the CB should grasp any opportunity to support the economy. In our turn, we believe that the CB should fight the deflation in the country first, as the economy currently shows a really impressive growth of 3.6% y/y (though mainly due to the increase in spending on the recovery after the earthquake). The news that there are some advocates of further incentives in the committee triggered sell-offs in the yen, though the movement again started from the bottom of the horizontal channel (78.17) and, very likely, will end before its top(78.70) is reached.
AUD/USD
The weakness of the aussie looked particularly striking yesterday. Despite the appreciation of the euro and strengthening of other markets, the Australian dollar suffered sell-offs and fell below 1.05 as a result. However now just like a day ago it gets some support, but is still much weaker than its rivals. Probably, for those, who use crosses to hedge their trades in major pairs, it is the best time to play against the Aussie in other currencies.
