EUR/usd
The EUR short-squeeze continued yesterday, but this time on a much larger scale. The single currency was appreciating not only against the dollar, but also against the yen and the aussie. Yesterday we mentioned that this run of events was quite possible. However, we repeat it again – it is too early to speak about a reversal in the pair. The current movement should be in no way regarded as the beginning of a reversal. The spikes two days ago and yesterday were quickly sold off. The attempt to rise from 1.2750 to 1.2775 was very short. Then followed the drop to 1.2710. It is quite likely that the most comfortable rate for eurusd now is 1.2740. But here much depends on the market reaction to the EU GDP data. The statistics for Greece and Portugal were released yesterday. They proved to be much worse than expected. The Portuguese economy shrank by 0.8% in 3Q and by 3.4% yearly. Greece suffers a huge loss of 7.2% y/y. The GDP stats for France and Germany have also been published. The former is demonstrating quite a handsome growth by 0.2% yearly and quarterly. The latter showed the same growth in 3Q, but annually the increase is higher – 0.4%. For Germany these growth rates are utterly disappointing. Such a poor growth was last seen more than two years ago. Yet, in both the countries the GDP figures came out better than expected, which is sure to be favoured by the market. However, EURUSD has made almost no advance. Probably, the market players are paying more attention to the periphery with its poor performance. There is also a strong feeling that the single currency is about to stop a retracement and will soon move down.
GBP/USD
Yesterday we all saw what kind of man Mervyn King really is. He was rather pessimistic at the inflation report presentation, which entailed the drop of the sterling. He was absolutely right saying that the growth in 3Q was the result of the weakness in 2Q. But the most disappointing revelation was a forecast of the possible GDP reduction in the current quarter. On such news the pair went down. It was eagerly purchased on the bounces; now the trading is held at 1.5850. The downward trend is still strong. The 200-day MA was broken, but the break wasn't confident, so for confirmation we have to see how the events will unfold today.
USD/JPY
The Japanese yen grew really weak this morning. And this happened after the sharp drop yesterday. usdjpy grew from 79.50 to 80.80. On Wednesday Premier Noda promised to dissolve the parliament and schedule the next elections for December. In the meantime, his most probable successor, Shinzo Abe, is urging the BOJ to carry out unlimited QE until the deflation is over (i.e. until the annual CPI is positive). Probably, the ascent will be similar to that we saw at the beginning of the year.
oil
Meanwhile, Oil seems to gain some confidence. Last week the rapid growth gave way to a sheer decline, yet the Oil rates remained at 84.50. Below these levels it was actively purchased. This week we've already seen something like that. It may signal preparation for a more confident growth. Moreover, the USA and China are likely to demonstrate a better growth than was supposed just a couple of months ago.
