EUR/usd
The Fed's minutes published yesterday afternoon produced a dramatic influence on the market. They made it clear that the Fed is now less inclined to provide further incentives for the economy. Speculators immediately reacted to that, having started to buy dollars and sell risky assets and currencies. As a result, the single currency, for example, sank from 1,3340 to 1,3215 in an hour. During the Asian session sales continued, which brought the pair below 1,32. Exactly the soft Fed's policy, which doesn't fully fit the current circumstances, is called the impetus of the 30% rally in the stock markets since last October. Of course, it's quite possible to understand Bernanke, who cannot introduce very quick and also pleasing to markets changes in the policy. To some extent, the market rally, which has driven the indices up to their 4-year highs, can be called the side-effect of the Fed's endeavours. However, it's of interest if the labour market will further retain the positive mood. The release of employment data is scheduled for the end of this week. It may exert a considerable impact on the situation in the market. And later today we'll see data on the private sector from ADP. In the last five months the average increase in the number of the employed has exceeded 200K. Starting with March the increase is expected to be the same, of 209K. Other employment indicators also point at a higher pace of job creation than before. Shortly after this publication the ECB press conference is to be held. This time draghi can allow himself to refrain from talking about new measures to support the troubled European countries, but he will still have to specify his stance for the future. As was forecasted by the ECB in autumn, the regional economy has slid into “slight recession”, however its further prospects are no longer that gloomy as before. Now politicians have to concentrate on the structural economic reforms, which will bring together the labour market competitiveness in different countries. It can be both the cost reduction in weak countries and wage growth in Germany and the like.
GBP/USD
Britain feels better and better, judging by the PMI reports. Earlier this week we observed a sharp contrast between the manufacturing activities of the Continent and Britain: while the former was suffering a slowdown, the latter managed to demonstrate a higher growth rate. Yesterday we also learnt that the construction sector reached the highest growth rate since mid 2010. Remember that the summer was extremely hot at the time. This spring is also abnormally warm in Britain. Well, will the spring sun melt the hearts of the British so that they would start to buy all these homes? Not necessarily. Most probably, the growth rate will be putting pressure on prices and housing cost itself will be drifting around one and the same point, first rising, then falling. Meanwhile, though the pound is decreasing against the dollar due to the higher demand for the latter, it still manages to strengthen its positions against the single currency. Overnight EUR/GBP tested the 0,8300 resistance. These attempts are very likely to happen again in the near future.
USD/JPY
As expected, the yen hasn't been in demand for long. At the first opportunity USD/JPY has gone up to 81,50 on the dollar strengthening. Now trading is held a figure higher, around 82,60. It's of interest that for all that traders should ignore the decline in the market, which usually triggers strong demand for the yen due to the flow of assets into liquid instruments. The yen will be able to continue falling further, if the dollar persists in high demand on improvement of the situation in the USA and the Fed's inclination for further QE.
AUD/USD
Australia has recorded an unexpected trading deficit in March. Economists forecasted a strong surplus of 1.12bln. But in practice import has exceeded export by 0.48bln. On such news the aussie quickly slid a half-figure down to 1.0260. And earlier in the evening it also sank deeply on the release of fomc meeting minutes. gold is now also playing against the Aussie. The $35 decline of the Gold quotes on Tuesday put an additional pressure on the currency. The troy oz of Gold is now worth $1642 against $1790 a month before.
