EUR/usd
As reported in the press, the European leaders are considering the possible extending of bailout funds. Released at the end of the day, this news managed to restore confidence in the markets and hold the euro back from falling. As a result, EUR/USD is trading evenly at the same level as a day ago, around 1,3310. Not very prominent, but quite alarming news came in yesterday from the ECB. As shown in the regular statistics, M3 Money Supply grew from 2,5% to 2,8% in February. It indicates the reversal from the terrible figures of December and accounts for the ECB's liquidity infusions at the time. Anyway, we should bear in mind that the main target was to boost lending to the real sector and this is the point where we have problems. The annual growth rate of private loans, published in the same report, instead of the expected increase showed a significant decline in the sector – from 1,1% down to 0,7%. It points to the fact that the ECB's money was not spent on lending, as draghi wanted, but just helped the banks to exchange poor bonds for more liquid ones. Eventually, a considerable part of this liquidity is likely to shortly go into reserves, as many banks have to draw large capitals to meet the new demands of capital adequacy by June. Still at closer consideration, the single currency displays certain stability, gradually winning back figure by figure from the dollar. It will last until the Eurozone indicators enter the red zone as a result of fiscal policy tightening. How much time does Europe have at its disposal, we wonder?
GBP/USD
Yesterday luck failed the pound. As we know, it was one of the strongest rivals of the dollar for a while, but yesterday even before the release of the Final GDP data the currency came under a strong pressure. As a result, the revision of data from -0.2% down to -0.3% strengthened the positions of bears and forced the pound to fall from 1,5960 to 1,5840, where deals were made at the Asian session. Anyway, this decline didn't break the general trend towards the lower boundary of the rising channel. Thus, we may see another attempt to test the 1.60 level in the coming days. The growth of the country's lending activity is also worth mentioning. From month to month the number of housing loans is growing, though, of course, there can be some reservations. If this trend is preserved, lending activity in other sectors may also become brisker. On the whole, the market is still set to believe that the Bank of England won't rush and declare another QE in a week, but will do that in a month when the current purchase programme is over.
USD/JPY
The Japanese yen is again following the general trends in the markets. The Fitch report, published today, indicated the reduction of the Japanese preliminary growth rate from 2.2% to 1.9% and, as a result, put a strong pressure on the Asian stock indices and increased correction in the currency. USD/JPY is now trading around 82.40 and may go far below this level, to 82.0. However, it's hard to say now if the pair has the potential for further decline.
AUD/USD
The Australian dollar is once again losing its positions. This time the sales have been caused by weakness in securities of the Australian mining companies. Yet, we shouldn't overlook another unusual trend of the current year. The high-yielders or currencies of the countries with the high growth rate have been more vulnerable than any other currencies since the beginning of the year. Since then the aussie has fallen by 4%, the Brazilian real – by more than 5% and the Korean won declined by 2% despite the brisker demand in the major trading partners. If China's hard lending comes real, the differential of the basic interest rates (the major impetus is carry-trade) won't increase, and probably will even be reduced. At the same time, carry-trade players are likely to look for a substitute for the former favourites.
