EUR/usd

How good should be the news to send Dow Jones to its 4-year maximums? Practically, it shouldn't be very bad after a chain of poor figures. Standing in contrast with a whole series of disappointing news, yesterday's Manufacturing PMI from ISM managed to set the markets going. In April the index totaled 54.8 against 53.4 a month earlier. Among the components of the index, those, reflecting dynamics of exports and new orders, showed the strongest growth. It is really impressive. The high levels of the commodity price and manufacture sub-indexes are also worth mentioning (61.0 for both). This speaks about the spread of inflationary pressure (it can be rather low, but affect many sectors) and impressive rate of production buildup. What looked absolutely incredible a year ago, this year has become real: the Chinese manufacturing activity declined that very month when the American one grew. Though the markets reacted positively to the upward revision of HSBC Manufacturing PMI from 49.1 to 49.3, the current figures of the index still reflect the decrease in the manufacturing activity as compared to the preceding month. Moreover, a month before this the manufacturing sector suffered even a stronger decline. Then the figure made 48.3. Today, markets will see data on German employment and Final PMIs for European countries separately and together, which promise to be quite interesting. Besides, in the afternoon ADP data on the employment change in the private sector are scheduled to be released. As expected, the April employment figure will be 180K higher than a month ago, when it came in at 209K. This forecast is accounted for by the general tendency of the market to expect the slowdown in the US growth, which is runs counter to yesterday's strong data on Manufacturing PMI.

GBP/USD

The pound- traders achieved a balance during the thin trading on Tuesday. In their opinion, the sterling looked extremely unsteady at 1.63, but nevertheless the bears couldn't push the pair down and bring it below 1.62. At present trading is focused around 1.6230. Yesterday's Manufacturing PMI for Britain confirmed that the country's affairs are far from being perfect. After a few months of the activity growth, in April this impulse almost died away, which is seen in the decline of PMI down to 50.5 against 51.9 a month ago. Today markets will see data on the Construction PMI. Remember that earlier this year its figures were rather high, but judging by the quarterly results, it was exactly the construction sector which brought down the general GDP level, having shrunk by 3.0% over the first three months. For now it's difficult to perceive how it can be combined. Apart from this, the BOE is scheduled to release the lending statistics today. The markets suppose that the net volume of the loans issued in March will make 1.5 bln, as it was on average in the preceding two months. It's a favourable sign as in the fourth quarter this figure was about 1.1 bln.

USD/JPY

The Japanese yen didn't stay below 80 for long. In a powerful motion it was hurled from 79.70 to 80.30. This motion coincided with the strengthening of the dollar after the release of strong PMI data on the USA. This reaction looks quite natural and will surely be to the liking of the Japanese officials. At the same time we treat the continuing direct correlation between the USD/JPY rate and stocks with caution, as the latter seems to be a bit overpriced. Should the market correct, it may trigger another decline of the dollar vs. the yen.

AUD/USD

The aussie was strong enough not to fall below 1.03. Partially it was due to the increased demand for risk in the international markets.  Australia itself didn't have any significant news on the agenda. The upward revision of the Chinese Manufacturing PMI can hardly be characterized as particularly favourable news. It is still negative and therefore indirectly reflects the possibility of the decline in the Australian export volume.