EUR/usd
Selling of risky assets in general and of the single currency in particular stopped yesterday with intensification of trading in Europe. The daily low of EUR/USD was 1.2937. The further recovery and stabilization allowed the single currency to close out the day at 1.2970, though trading was very slack because of holidays in the USA and Canada. It can well be the case that the pair will continue growing today and that yesterday's selling (which actually was without a particular cause and volumes) was nothing more than profit taking after the growth from 1.2050 to 1.3170. Yet there are some factors which can slow down the growth pace. Today IMF has released its regular World Economic Outlook, where it warns about ‘alarmingly high' risks of deeper global recession. The low rate of the euro in the summer months allowed Germany to gain a better advantage in the foreign trade. Exports exceeded imports by 18.3bln in August. However, the current account shows a different performance. In other words, the capital inflow boosted by significant exports is recouped by quite a cautious inflow of investments, since investors remain rather pessimistic about further perspectives of the euro zone. The pessimism of investors was confirmed by one more report yesterday. The Sentix index grew to -22.2 from -23.2 in October, staying in the area of cyclic lows against the market forecasts. Thus, due to all this, the current situation in the euro zone doesn't look very bright, however it was all known before. The good thing about cyclic lows is that they give rise to the move only in one direction – up and this move has already begun, albeit not as quickly as many expected.
GBP/USD
The absence of significant news for Britain in the previous days is more than compensated today. This night the data on the BRC Retail Sales Monitor were released. They showed that in this September the index is by 1.5% bigger than in September 2011. Fewer and fewer real estate appraisers expect a further decline. The balance has grown to -15% compared to -18% a month before and the forecasted -20%. It seems that in the fourth quarter this year and in the first quarter next year this index will be able to grow further due to Funding for Lending from BOE. The release of industrial production statistics as usual precedes the NIESR GDP Estimate. Good news can make the pound's life easier – in comparison with the euro the currency actually has felt somewhat out of sorts lately.
USD/JPY
There is a plenty of problems in Japan, yet the country draws money like a magnet. Today's statistics showed that despite the real trade deficit of ¥644bln in August the current account feels more than confident, remaining in the surplus of +¥722bln. This course of events could be to the liking of other countries' politicians, but for Japan it only means that they need to step up the struggle with the growth of their domestic currency. Otherwise the real sector will remain a zombie and the index of Eco Watchers will keep drifting towards the lows, which were seen in the first months after the earthquake and tsunami.
AUD/USD
Yesterday the Australian dollar managed to bounce up after the drop towards the lows of July and early September. Then there was a reversal off these levels. However, at that time decisions on selling were based on the external circumstances and now the aussie is sold on the decrease of the interest rate differential and on the expectations of further reduction of this differential. Many speak about the possible struggle for the parity with the dollar in the coming days. However, there's hardly anyone who ventures to make forecasts about the outcome of this battle.
