EUR/usd
The dollar keeps retreating, and stock exchanges across the globe are hitting record levels. Thus, S&P once again set a new historic record, MSCI is finishing April with a 4.4% growth, which is the best rate since June 2012. And TOPIX is heading for April's end with the best results for the month since 1999. This optimism is wholly rooted in unevenness of the US economic growth. While consumption and the housing market are doing well, inflation remains low. Besides, this problem is acute both for Europe and United States. The Preliminary CPI for Germany, which was released yesterday, showed that in April consumer prices had fallen by 0.5% m/m, and the annual inflation rate declined to 1.2%. PCR Deflator, the Fed's preferred measure to estimate consumer activity, is also on the decline. According to yesterday's statistics, in March the annual growth rate dropped to just 1.0%, which is the lowest level since October 2009, i.e. the weakest figure over the whole history of the postcrisis growth. As a result, we get a toxic mixture of some overheated sectors and some relatively sluggish ones. Anyway, many believe that in this situation the Fed will continue to inject money in the markets for a while. This approach will make investment into stocks and other high-yield assets attractive and will also put pressure on the yield of the US government bonds ( it is also to the benefit of the Treasury due to a lower interest volume). This is where growth comes from. Today EUR is trying to settle above 1.31.
GBP/USD
The sterling, which we highly praised yesterday morning, faced certain difficulties during the day. Sellers became more active at 1.5550 and, as a result, brought gbpusd to 1.5470. As there hasn't been any bad news for Britain over this time and the preceding trend was ascending, we still believe that this behaviour of the sterling is just profit-taking after quite a big rally. This day due to the release of mortgage and lending statistics may turn out to be more interesting than Monday.
USD/JPY
There were lots of news releases for Japan last night – most of them positive. Traders took this news with caution, understanding that the country's economy is still in strained circumstances. Thus, household spending proved to be much better than expected (+5.2% y/y), but retail sales reduced by 0.3% y/y. Industrial production has shrunk by 7.3% over the last 12 months, while PMI in these sectors has pointed out growth for two months in a row. The housing starts rate makes 7.3% y/y, but orders in this sector have declined by 3.4% y/y. Traders don't know how to react yet, so usdjpy remains at the lowest level for the last two weeks – 97.70.
AUD/USD
It was a good day for the aussie yesterday. It managed to consolidate above 1.30 and close out the day at 1.0348. Now bulls are trying to take advantage of the positive situation in the market and also of the Aussie's proximity to the lower bound of its 10-month corridor. Fans of technical analysis should note that the pair is fluctuating on a smaller scale. It promises an impressive move in one or the other direction.
