EUR/usd
Don't be surprised at yesterday's retracement of the markets. It doesn't really mean that the further upward move is not possible and that the market is disappointed because Bernanke has proved to be tougher than needed. Yesterday's move down as well as selling late on Wednesday has just marked taking of profits and rebalancing of positions before the Christmas rally. Yes, we believe that it hasn't started yet, since the level of 1.3140 hasn't been passed. The bears have pushed the pair off this level frequently this year. But this time there's a good chance that the level will be passed and that after that the pair will soar up. In our opinion, if the euro consolidates above 1.3140, it has every chance to finish the year already at 1.35. First of all, the US Fed is doing its best to ensure an abundant supply of dollars in the markets. For that it's ready to print a trillion dollars per year ($85bln * 12months). In addition, EU politicians again and again surprise by their readiness for integration. Yet even the prospect of Berlusconi's return to the mainstream politics doesn't discourage the debt markets. Italian bond yields kept falling at yesterday's auctions. So, it only remains to settle the fiscal cliff issue. But the market participants don't worry much about it either in the anticipation of Obama and Boehner's negotiations. The market optimism is maintained by good performance of Chinese stock markets. It's been about two weeks since they pulled ahead after a long time in the back rows. The handover of power is finished – the money is again going to China. If you feel bearish, now it would be more reasonable to stand aside, otherwise you may be swept away by the moving avalanche.
GBP/USD
The sterling has again proved our hypothesis that while the euro appreciates traders get rid of the British currency. However, yesterday the market got pessimistic on the news that S&P had cut down the country's rating to negative. This is the third agency of the troika, stating that Britain is at risk of losing its AAA-rating. There's nothing to be surprised at, taking into account poor economic indicators for the previous years and a discouraging outlook for the coming year. There aren't any stats scheduled for release today, so probably we will again see weakness of the euro and its appreciating against the dollar and the yen.
USD/JPY
Turning to the yen, usdjpy reached 83.95 last night. This means that by a powerful move of the recent two months the pair has returned to the level of its yearly highs (84.17). By the way, it was roughly around 84 when the pair reversed last spring against the background of falling markets and when it became clear that the initial expectations concerning the BOJ's activity were too optimistic. Now expectations are again high. It is believed that on December 20 the BOJ will expand its loan programme and the newly elected government will put a higher pressure on the CB.
USD/CAD
The canadian dollar is still being purchased. Unlike the euro, which is stuck in the channel and cannot hit new highs against the dollar, usdcad is now at the lowest level for the recent two months. The pair will hardly lose momentum at these levels. The stronger support is based much lower, at 0.97 against the current 0.9830.
