EUR/usd
It's a funny thing – the market is teeming with moves in various directions. The EU currencies (EUR and GBP) suffered a lot yesterday. oil is going down in price, while the stock market has grown just like other risky assets. No matter how illogical this move is, there are still some signs that the markets are getting back to reality. So, yesterday the single currency dropped down after the ECB's revision of the EU economic growth outlook. Mr. draghi was rather pessimistic in his comments: on average the European economy is forecasted to shrink by 0.3% in 2013. Yet, as has been noted, the gradual improvement is expected only in the second half of the coming year. So, the first quarters will be just horrible for the eurozone. This is a quite likely scenario since unemployment keeps setting records and the suffering countries have to tighten their belts instead of providing new incentives. The similar situation (the economy suffering due to austerity measures) is observed in Britain (see below). And, on the contrary, the soft monetary policy and unwillingness of the US officials to combat the budget deficit helps the country to maintain a good pace of economic growth. Of course, the employment figures are far from being ideal, but the eurozone (suffering the highest unemployment on record) can only envy the USA. Thus, the country's jobless claims have returned to the pre-Sandy levels. When compared to the USA, the weakness of Europe looks really intimidating. This is why traders are disappointed and keep eagerly selling the euro. The support line, we spoke about yesterday, was broken by a sharp downward move. And you shouldn't expect a reversal even on today's payrolls. Most likely, it will be possible only on the Fed's decision next Wednesday.
GBP/USD
The way traders treat the British pound now is quite explicable. A day ago OBR published its discouraging forecasts (provided by Chancellor), which received confirmation from the poor EU outlook. The coming year promises to be hard for Britain, quick improvement is not expected. The BOE and Exchequer will have to work hard to save the economy from the impending slowdown. Yet, it's getting clear that all the previous attempts were futile and didn't lead to any increase in exports: the visible trade deficit for the first 10 months is the biggest on record.
Oil
Oil is falling because of the increase in the US inventories. By the way, depreciation of the “black gold” arouses optimism in the American exchanges. The country is getting more and more energy-independent, at least in the short term. They say, the new wells will get depleted soon, but notwithstanding this fact we shouldn't forget about the intention of Saudi Arabia to cut the price of brent down to $100. Otherwise, the country risks losing its market share.
Today's employment stats will hardly have any strong impact on the market. Now the market attention is mainly concentrated on QE3 extension, which is scheduled for the next week, and on the fiscal cliff issue. It's getting clear that even if the employment report is favourable, the Fed will extend asset purchases to its balance sheet. Such perspectives don't let the US stocks fall following its EU counterparts.
