EUR/usd

The euro gained almost no momentum yesterday. Some factors offset other ones and, as a result, EUR/USD remained at 1.32. Yesterday markets saw a batch of PMI figures. Interestingly enough, statistics have again confirmed the old observation that recovery of the U.S. real economy happens 3-6 months earlier than that of the European one. Thus February's PMI for the euro area was unexpectedly revised down to 48.8 against the pre-estimate of 49.4. The most depressing thing about this is that a month earlier the service sector displayed growth and the index figure made 50.4. In other words, in January the service sector was intensifying its activity yet, but already in February the situation changed for the worse and the sector's activity was swiftly fading away. In contrast, ISM's PMI data for U.S. reflected the increase in the service sector growth. The indicator rose to 57.3 from the previous 56.8. Such strong data generally support the demand for risk in stock markets and risk-sensitive currencies. However, it was different this time. Markets didn't manage to recover from the sales triggered by lowering of China's targeted growth. We consider it to be an exaggerated reaction to the expectations. The facts themselves may prove completely different. But the market is still pretty heavy after 2 1/2 months of the persistent rally. On the other hand, heavy sales need a good reason, for instance, a weak report on labour markets this Friday. Until then the sideways trend is likely to dominate.

GBP/USD

The British pound had managed to recover by the end of the day and rose to 1.5850 during Asian session. As we mentioned earlier when commenting on the UK Services PMI data, the statistics are too good to let the sterling fall. At the same time, the sideways movement in stock markets, which is expected to set by the end of the week, is unlikely to allow for any significant fluctuations in the British currency against the dollar. However, already now the sterling displays comparative strength against the euro, the yen and the aussie. There are no important statistics expected today, so the fluctuations in the pound would be determined by the sentiments in the adjacent markets.

AUD/USD

The Australian CB kept the interest rate unchanged at 4.25%. This result fully met the market expectations. It is noteworthy that RBA estimates the economic growth as going “in accordance with the trend” and, at the same time, expects the “below trend” world economic growth in the near future. Despite this rather optimistic statement the Aussie suffered heavy sales. China's influence on the currency was the strongest. As we mentioned above, China has revised the economic growth target from 8% to 7.5% for the next few years, thus sparking off investors' fears that China's economy will be heavily slowing down. If true, it will first put brakes on the country's resource supplier, that is Australia.

gold

Interesting dynamics is now seen in Gold. Despite the improved economic indicators, quotes of the precious metal received a sharp blow last week, fallen from $1786 to $1691. And so far Gold finds it difficult to fully recover. The demand for safe-havens is not as strong as it used to be over the last few years, and inflation remains under pressure. As a rule, one of these factors or both at once have supported the demand for Gold. But this time the situation may change and Gold will not show the 12th consecutive year of growth.