EUR/usd
This week abounds in important news releases, but all of them are expected a bit later. Looking forward to the news or being particularly cautious, the market participants preferred to keep the currencies within the recent ranges yesterday. Anyway, we can speak about some progress in the single currency since eurusd closed out the day at 1.3060 against the opening level of 1.3020. In itself this move wouldn't be a sign of something, but in the context of declining stock and commodity markets it reflects the steadiness of the euro purchases at the current levels. The American indices had displayed some improvement by the end of the day yesterday, but still trading is held far from the local highs. The favourable attitude to the euro wasn't affected even by the Bundesbank's publication, pointing out a possible reduction of the GDP in the fourth quarter after the stagnation in the third one. The blame for that and for the decline in the German business activity fully lies with the suffering southern countries. The rating agencies, in their turn, keep cutting the ratings. Now it is the turn of Spain's regions, for which Moody's has cut the rating by 1-2 steps. On the announcement of the decision the euro fell down to 1.3040. Across the Atlantic, in Washington, fomc starts its two-day meeting. The Fed will hardly find the September unemployment decrease big enough to speak about the improvement in the economy. The CB mainly looks at the employment level and the latter is still far from the pre-crisis highs. Thus, Bernanke and Co. are likely to remain cautious and promise to offer further incentives in case of necessity. It carries a propitious potential for the markets and the euro. In the recent presidential debates Obama asserted his superiority in making speeches and leading dialogues. However, the earlier polls showed that Romney somewhere overtook and even outran the incumbent president despite the victory of the latter in the debates a week before. It also should act in favour of the markets and the euro.
EUR/GBP
Many commentators note that the European political situation is getting less uncertain. It largely accounts for the rather good performance of the euro against the British pound and the Swiss franc. EURGBP crossed its 200-day MA and is gradually hitting new and new highs. It is remarkable that this should happen on the expectations of good statistics from Britain. Earlier the reduction of this country's GDP was accompanied by purchases of the sterling on the concerns about the integrity of the euro zone. The preliminary GDP estimate will be released this week, so we would consider short-term selling of the pair not earlier than before the release.
USD/JPY
The yen dropped to 80.0 against the dollar this night. It is an important psychological level, at which the pair may make a stop. Yet we would advise you to be careful with selling of the pair as over the last three weeks it's been more than once that the short-term consolidation was followed by further growth. Some even started speaking about the beginning of the currency war by Japan. After 20 years of the zero economic growth and rise in the rate of the domestic currency by over 65%, the country has a moral right to struggle for survival despite the feigned moans of the rivals.
USD/CAD
The BOC takes a decision on the interest rate today. It is expected that the CB will focus on the external risks and slowdown of the internal inflation to justify the rate increase despite the rather good economic performance. For comparison: the GDP has grown by 4.3% from the pre-crisis peak, yet the appreciation of the currency due to the demand for quality assets has caused a considerable inflation slowdown. The BOC should be on the look-out to prevent the negative consequences for the real sector of the export-oriented economy.
