EUR/usd
Yesterday's market events can be well packed into two stories. The first one concerns the ISDA's (International Swaps and Derivatives Association) conclusion that the swap for private Greek debt holders is not a credit event and therefore will not trigger CDS. This news has supported equity markets, especially the banking sector, which feels somewhat mystically feared at the word “default”. The other story is about rather unimpressive data on the economy. That's all in relation to expectations, of course. If earlier the U.S. unemployment claims totaling 351 thousand gave rise to the most optimistic sentiments in the markets, now these figures don't seem to be enough. Again too optimistic market expectations concerning the economy are somewhat alarming. In a week, on Friday, markets will see data on the US labour market. In general, economists expect the employment increase to go above 200,000. Such monthly rates of job creation have been observed only in the best of times. Now the state of affairs is not that perfect, so it would be better if the markets moderated their optimism. U.S. consumer spending rose by 0.3% in January, which is lower than the forecasted 0.5%. The manufacturing ISM figure hasn't met the expectations, having fallen from 54.1to 52.4. It is still the phase of growth, but of a more moderate one. The markets however expected acceleration. The same trend has been also seen in the report on durable goods orders. The economy gained momentum in October-December, having built up ample reserves, so now it may slow down for a while, and though not being at risk of recession (yet) it is unlikely to show the same impressive acceleration as in winter. The single currency is falling, which goes along with the model we've observed earlier: the ECB's loans cause weakness of the euro. The EUR/USD is now close to 1.33 and two days ago tried to break above 1.35.
GBP/USD
The British pound is trying hard to resist the across-the-board strengthening of the dollar. At the same time the pound is gradually crawling up and feels all the more freely above 1.59, which is also the level of the 200-day moving average. We keep saying that this mark is a good signal for institutional investors to consider the deal on the pair. And what is especially good is that this happened at the junction of the months, when portfolios are generally rebalanced. At this the pound has almost ignored yesterday's weak manufacturing PMI data. What's good for the banking sector (see above) is good for the sterling in the first place.
USD/JPY
The yen was quick to take advantage of the Asian stock market strengthening and started to decline. As we promised, yesterday's trading proved rather quiet and closed almost at the opening levels. The major movement fell on the Asian session. Currently, the currency is trading at 81.44, which is close to the local highs. If the pair aspires to get back to the trading range of October 2010-July 2011, it has the potential to go up to 83-84.
AUD/USD
The aussie is rather cautious about testing the new highs, but at the same time it doesn't want to retreat. On Wednesday AUD/USD has made a vain attempt to test 1.0850 and then fell to 1.07. But on Thursday the market experienced the methodical purchases of the currency. Someone's big hand picks up the Aussie on the downs. It is possible that for such purchases the yen is increasingly used as the funding currency. Sure it is all about these pre-crisis methods!
