EUR/usd
The crisis is not the best thing to be joyed at, but now it is the very factor which raises the transparency of banks. Important: the Fed WILL extend the asset purchase programme. So, now the current purchases of the mortgage-backed securities to the Fed's balance sheet (40bln/month) will be joined by purchases of US Treasuries (45bln/month). Operation Twist expires this year. The most unusual and surprising thing here is that the Fed has decided to set the parameters, which would serve as signals for consideration of a tougher monetary policy. Thus, for the Committee to start thinking about a more rigid policy unemployment should go below 6.5% (now it's 7.7%) and inflation shouldn't exceed 2.5% (now it's 2.2%). Also these 2.5% should stand for the inflation forecast for a year or two rather than describe the current situation. So here we may expect some spikes from time to time. The transparency demonstrated by the Fed now is a new step up to establishing a better communication with the markets, which is sure to be favourable due to a lower level of uncertainty. The celebration of the victory wasn't long, since, just as we described yesterday, fomc's actions had already been built into the rates. Soon after the release the stock markets faced profit-taking, yet the single currency keeps growing. Today it has approached 1.31, having grown by a big figure over the last 24hr. A bit higher, at 1.3140, the pair will come across the resistance, which has already withstood three attacks since September.
GBP/USD
The British pound again fails to keep up with the euro. This situation has been frequently observed lately. Despite a deep integration of the economies, the pound is turning more and more into the euro's antipode. Still gbpusd has managed to approach the local maximums at 1.6150. The good thing for the pair is that it has managed to break out of the gradual downward channel, which was in place since late September. This may support the bulls in the attack on 1.6170. The next obstacle is only at 1.63.
USD/JPY
Just as we expected, the Japanese yen keeps losing its grounds due to the comments given by politicians. The prospective candidate for the PM post, Abe, pledges to improve the position of manufacturers. He has some experience in this, as during his previous occupation of the post manufacturers' sentiment hit multiyear highs. Besides, it's rumoured in the market that the BOJ will extend its loan programme, issuing money not only to the banks, but also to corporate and hedge funds.
EUR/CHF
The National Bank of Switzerland hasn't surpassed the expectations of market speculators that the SNB may introduce negative interest rates. Earlier speculations around this were caused by introduction of fees on franc deposits for financial institutions. Despite the unsurpassed expectations the CB has also disappointed speculators by preservation of the former sentiment and poor growth and inflation outlook. Probably, EURCHF will return to the levels where it started the rally, i.e. closer to 1.2050.
