EUR/usd

The single currency has moved up on triggering stop orders and reached 1.3360. This level is the highest since mid-December. The rising optimism in stock markets and subsiding fears around Greece lead to partial liquidation of short positions in the euro. As has already been mentioned, the market is heavily tilted against the euro, yet its exchange rate has remained relatively stable so far. Thus, the upward movement of EUR/ USD has good chances to go on. This rally is supported by strengthening of stock markets on good reports and rise in prices of raw materials. Until recently the inverse correlation between commodity markets and the dollar has served well, helping the single currency to climb up. This time the long-term steadiness of this correlation is questionable because of the shifts in the euro area, which may keep exerting pressure on the performance of the eurozone economies for a long time to come. However, in the near term the single currency may get support from the markets. It's not likely that the euro will face serious obstacles on its way to 1.35. European banks are supported by speculators on the threshold of the second 3-year LTRO auction. It is scheduled for the next week. The previous auction demonstrated the bank demand at 500 billion euro, and this time the volume is likely to be the same. With this tool at hand the ECB helps banks to ease the need for refinancing and to increase demand for government bonds.

GBP/USD

The punishment of the pound for ‘weak' MPC minutes hasn't lasted for long. Already throughout yesterday's trading the pound managed to recoup most of its losses and return above 1.57. Today Britain will publish the revised data on GDP. The preliminary figures showed the economic contraction by 0.2% in the fourth quarter. But later we witnessed a rather good improvement in the trade balance and increase in retail sales. All that may contribute to the upward revision. If this happens, the pound may get an additional demand and try again to beat 1.58.

USD/JPY

The USD/JPY rate keeps rising after a short stop on Thursday, which can't but be welcomed by Japanese politicians. Generally speaking, it is really of interest that pre-crisis correlations should work so accurately. If so, and the yen will again become the funding currency, it's possible that the long-term trend for recovering will set. If you put aside all doubts and risks regarding the euro, USD/JPY has enough room to go up. In June 2007 at the beginning of the liquidity crisis the pair reached the 124.13 high. But in the near term, it is more likely to stop for a while near the current levels of 80.50.

AUD/USD

The aussie has been also affected by the overall positive sentiments in the market. AUD/USD rose to 1.0740 overnight. This is actually near the middle of the trading range of the last two weeks. It's also worth mentioning that the Aussie's closest competitor among the risk-sensitive currencies has made a serious step up over this time. The New Zealand dollar has reached the area of its five-month highs and the canadian dollar remains a bit more expensive than the U.S. dollar, though it's still rather cautious about testing new lows in the USD/CAD pair.