EUR/usd
Yesterday the US dollar was much weaker than expected. The few speculators, still staying in the market, tried to take eurusd to 1.33, but were stopped at 1.3280. After that even the moderately negative news from the USA was enough to push the pair below 1.32. The Consumer Confidence stats were poor. Concerned about the impending fiscal cliff and frightened by press releases, Americans were very cautious about their spending and tempered their optimism. As to spending, we have a preliminary estimate of the pre-holiday activity. It wasn't very impressive with growth of just 1% against 2% last year. The same about the CB Consumer Spending. It dropped from 71.2 to 65.1, which is the lowest figure since August. New home sales also failed to meet expectations. The annual rate made 377K in November in comparison with 382K a year ago. In a broader perspective it's a multiyear high, however the market was disappointed. This is largely due to the fact that the markets lack real money and some other players apart from the speculators, reacting solely to expectations/facts. Anyway, last night EURUSD again returned above 1.32 and is now consolidating at 1.3240.
GBP/USD
The British pound again received a harder blow than most of its counterparts yesterday. The attempts to break through 1.62 bumped into the wall of sales. gbpusd was thrown off to 1.6070 and only now is trying to put a hold on 1.61. EURGBP is still controlled by the bulls: the pair managed to consolidate at 0.82.
AUD/JPY
AUDJPY has been one of the best carry-trade instruments for many years, right since the 90s. But today we'd like to focus on its recent history. During the crisis the pair tumbled down from 104 to 55 over five months. But shortly afterwards it quickly recouped two thirds of its losses. Since 2010 the pair has been fluctuating in a narrow range because of the constantly interrupted recovery of the global economy. This behaviour runs counter with the previous history of AUDJPY, when it was fluctuating in a much broader range. Now, in our opinion, the movement with “no bunds” may resume. For that it's just enough to break through 90, more so, the current trading level already makes 89. At the beginning the growth will be boosted by the fighting mood of the new Japanese ministers, who don't want to ease their pressure on the BOJ and on the contrary keep intimidating the Bank. Further the growth may get some support from appreciation of the aussie (audusd is close to the lower bound of the channel observed for the last half-year). Also we can't exclude repositioning on the part of traders, who have piled a lot of stop-orders outside the channel. In a broader perspective it's clear that Australia will start to toughen its monetary policy much earlier than Japan. Thus, the differential between the interest rates will broaden in the long run. Despite the unambiguousness of our forecast, we still recommend to be cautious with this pair. You see, the bears still may launch an attack for this three-year channel. Besides, there are quite many open positions in the Aussie, which also can affect the currency's ability to grow, leaving it far behind its rivals. Also we shouldn't forget that the RBA is still dovish about its monetary policy, willing to cool demand for the currency.
