EUR/usd
Mario draghi started yesterday's press-conference with quite an unexpected statement pointing to the low possibility of further rate cut or another LTRO. It is a really surprising stance, especially at the time when the European countries one after another slide into recession. Apparently, the atmosphere in the ECB is such that no matter how peace-loving the ECB's head is he will eventually turn into a hawk. Of course, it wasn't without the heavy pressure from Germany, all the ruling top of which reacted nervously to the latest actions of the ECB in regard to long money and easing of collateral requirements. However, to Draghi's credit, he honestly pointed out his readiness to consider further measures of economic stimulation should the political risks grow. At the coming weekend the presidential elections in France and parliamentary ones in Greece will take place. The people's dissatisfaction with the current authorities is quite natural, however there is a big question if the new authorities will be able to change the situation for the better or if they just ruin all the groundwork, laid with such difficulty. At the very beginning of Draghi's performance the euro dropped by 30bp, but then immediately started to grow and reached the daily high of 1.3180. However, nothing of particular interest was said, so the pair closed out the day exactly at that very level from which it started the day, i.e. 1.3150. This day promises to be very quiet before the release of the US employment data. On average the market analysts expect the 170K growth after the increase just by 120K a month earlier. Yet, in our opinion, there is risk that today's data will be similar to those of March. The ISM Non-Manufacturing PMI, published yesterday, shrank sharply in April from 56.0 to 53.5, though a much softer lending to 55.5 had been expected. The employment component of the index also slowed down, promising a lower growth rate than in the preceding month. It's really important as the services sector makes 80% of GDP.
GBP/USD
Yesterday the British pound worried about its continental vis-à-vis, but still managed to do just the 60 bp journey from its daily low to daily high, which is not much for such a volatile pair. As a result, the gradual downward slide in the first half of the day was diluted with two relatively sharp fluctuations down and up, after which the pair calmed down. The sterling is now trading at 1.6190. The steep slope of the upward trend has been broken, but it is still early to speak about the decline and reversal. The American statistics will be able to set the market going in either direction today.
USD/JPY
The powerful market forces are surely eager to preserve the status quo in the USD/JPY quotes. Earlier we saw that the pair couldn't stay below 80 for long. In the four-hour candlestick charts seven candles in a row show how the pair was picked up not lower than 79.80. However, the pair is not strong enough to grow either. The three attempts to consolidate above 80.50 stumbled upon sales. If the stock exchanges start correction, the pair will find it hard to grow and the Ministry of Finance as well as the BOJ will have more issues to deal with.
AUD/USD
The aussie is still under pressure. The AUD, obedient to the movement of stock exchanges, was declining all day long yesterday. On Draghi's commentaries and poor data on the ISM Non-Manufacturing PMI the currency started to move down even faster and by the end of the day was already below 1.0240. It's been the fourth test of this level since the beginning of April. Now it seems that the decline in March was followed by consolidation in April, which can spill over into further downward movement in May.
