EUR/USD
Our forecast that the US statistics would go beyond expectations proved to be true. However, the following reaction was absolutely different. Cutting off the initial downward impulse in EUR/USD, the euro has already grown by 2 points from 1.22 to 1.24. At the opening of the Asian session the demand for the euro enabled the pair to hit a high at 1.2443. The impressive US statistics inflamed risk demand. Despite the employment growth from 8.2% to 8.3% in July, the number of jobs increased by 163K last month. Remember that the average market forecast was 100K, and the maximal estimated level among Bloomberg's respondents made 165K. So we can say for sure that the market was surprised by the actual figures. It is of interest that the market reacted to the news as if the data were as good as in the past, when strong statistics from the USA largely implied optimism for the rest of the world. It's quite likely that it will be the same now and the employment growth will boost the international trade again. However, don't forget that good housing statistics make the QE3 in September less probable. The next meeting of fomc is scheduled for September 12, which means that there's one more payrolls report ahead. Interesting moves could be observed in European debt markets on Friday. The yield of short-term peripheral government bonds has sharply declined. This is the reaction to draghi's announcement of the ECB's intention to purchase short-term bonds. The yield of Spanish 2yr bonds has dropped from the high of 7.14% fixed a couple of weeks ago down to ‘just' 3.9%. Undoubtedly, this redisposition may make the single currency again attractive for those who need liquidity. To sum it up, the favourable report on the US housing market and improvement in the EU periphery debt markets is likely to support the euro in the coming days. Anyway, the less probability of QE3 and persisting dependence on the measures taken by the EU politicians and not by the ECB still make the situation risky.
EUR/GBP
To estimate how deceitful the market reaction to Draghi's speech was, consider the performance of EUR/GBP on the Friday release of US statistics. As a rule, the growth of risk demand, going from Asia or America, has been more favourable for the sterling. But on Friday the euro felt more confident. No doubt, that was the reaction to stabilization of the periphery bonds yield curve. The ECB hasn't saved the euro zone, but made the distortions smoother along the whole curve. Against the dollar the performance of the sterling is more moderate than the euro, nevertheless the pair has managed to bounce off the lower boundary of the side channel. The euro/pound is now above 0.79, and the dollar/pound is trading above 1.56.
USD/JPY
Once again the yen failed to break the channel. Eager purchases of USD/JPY on Friday's housing statistics ended up with the break above 78.70. Further the pair bounced off the extremums, setting out for the more comfortable middle of the channel at 78.40. It is still below the 200-day moving average (now it goes through 79.0), but quite far off the lows to be afraid the intervention of Japanese Finance Ministry. Shall we wait for another test of 78.0?
AUD/USD
The aussie keeps gradually moving up. Though the pair failed to rise above the Thursday daily high, it formed a good growing candle by the end of Friday. It is even more reassuring that the week was closed out at the highest level since mid March. Not once we've seen the amazing capacity of the Aussie to recover from the declines. And this time it seems as though the Aussie targeted the area of 1.07 from the current 1.0560.
