EUR/usd

The former Prime Minister of Greece, Lucas Papademos, said that the country is hardly likely to exit the euro zone, though mentioned that the risk still remains. As we predicted, the recovery of the single currency has proved to be weak and short-term. Already yesterday the euro/dollar was falling without any serious news background involved. Sales grew only at the end of the day. Yet, it is of interest that the American exchanges closed the day at the opening levels, having made an attempt to grow prior to that. We again see that the markets don't act in unison. Such a picture is usually observed when the market participants are focused on the technical side of trading and rebalance their portfolios. We've already mentioned that EUR/USD cannot break below 1.2640 straight off. However, after a certain consolidation, the chances that the pair will manage to do that will grow, should the events unfold in the negative way. Besides, the dollar will be in greater demand if America posts more improvements on concerns about the European integrity. The American bulls received a good reason to act yesterday on the release of the US Existing Home Sales data. The sales rate grew by 3.4% in April, which is within a slightly upward trend that we indicated after the reports on the housing starts. Another positive factor is that the median home price has grown right by $12.6K, up to $177.4K. We should also say that the stock of unsold homes has increased, nevertheless these fluctuations are within the normal limits and stay far from those extreme levels which were observed during the crisis and even a year ago. Tonight our optimism concerning the US housing market can be proved or disproved by the New Home Sales data. Investors forecast growth. It's also expected that the House Price Index from FHFA will demonstrate positive dynamics as well. At the same time analysts feel more and more skeptical about the chances of the European leaders to come to an agreement in Brussels today.

GBP/USD

Yesterday's news from Britain turned out to be quite favourable for those who are concerned about the country's economy. The British government managed to achieve the budget surplus in April. The net debt repayment made £18.8bln. This is the best month in history of the indicator since 1993. Besides, as we hoped, inflation has proved to be a bit weaker than forecasted. It has saved King the trouble of writing to the Exchequer. However, the inflation pressure hasn't subsided everywhere by now. The large budget surplus combined with the decrease in inflation will give the Bank a free hand to stimulate the economy. To judge about the Bank's readiness for that we should turn to the MPC Meeting Minutes, published today. Thus, at the beginning of May the Bank wasn't in a hurry with the QE extension. Only one member of the committee, David Miles, spoke about the need for further expansion of the asset purchase programme. It's quite probable that yesterday's drop in GBP/USD down to its local lows, 1.5750, will spill over into a deeper decline below 1.57 today.

USD/JPY

The Japanese CB again disappointed the markets. By a twist of fate, it triggered the purchases of the Japanese yen. Again the downward corridor we indicated earlier withstood the pressure and the attempts to break above 80.0 turned into sales of dollars for yens. Many expected that at the considered meeting BOJ's governor Shirakawa will decide on further extension of the asset purchase programme and therefore support lending in the country. It didn't happen, and the sales of the risky euro and aussie again force investors to turn to the liquid Japanese assets. Note that USD is falling versus the yen while the dollar index has hit its 20-month high.

oil

Oil is another loser of the month. The American WTI futures hit the 6-month low overnight and went below $91 per barrel. Oil is falling into the abyss, despite looking extremely oversold. Will the situation change in the coming days? We stick to the opinion that Oil still has the potential to fall, though a short consolidation is quite probable.