EUR/usd
Greece convinces us more and more that it is just one ‘formal' step away from restructuring of the 200 billion euro debt to private investors. Now it is just the time for the country to focus on reforms that will lead it out of the downward spiral and ensure its solid growth and debt solvency in the future. Lenders demand serious pension reforms and higher workforce competitiveness. If all goes well, Greece will be granted the second aid package of 130 billion later in the week which will help it to avoid an uncontrollable default in March. The Greeks may promise any kind of reforms, this hasn't been a problem to them for the last two years, but what has been a real problem is their implementation. The facts don't justify even the most skeptical expectations. There's not much good news coming from the other side of the Atlantic as well. Composite S&P Case/Shiller Home Price Index fell by 0.7%, lower than expected. The correction after the swift index advance proved really strong, which makes it impossible to speak about the strong start of the year. Furthermore, data on consumer sentiment from the Conference Board quite unexpectedly turned out unfavourable either. The index fell to 61.1 in January from 64.8 a month earlier, while it had been expected to rise to 68.8. It seems that economists once again were more optimistic about the economy than they ought to have been. On such news, the single currency wasn't able to assume the offensive in Forex. It fell from 1.32 to 1.3040 by the end of the day and is now helplessly floundering around 1.3070. January was a great month for the markets, now to continue growing markets need positive news, which is already rather scanty.
GBP/USD
The fact that European problems mainly affect only Europe is clear from the dynamics of the pound. sterling bulls managed to find enough strength to continue growth and to close the day positive. The pair stopped one step away from 1.58. The euro sales, which caused adjustments in other markets, didn't spoil the British currency's mood much. The pound is a good refuge for European capitals. It'll be more so, if the Bank of England expands its QE programme, which will reduce bond yields. So it really makes sense to buy gilts now. The logic, saying that this programme will increase the money supply in the market doesn't work for now. Banks sit on sacks of money and don't issue loans. The data published yesterday again confirmed the reduction in the broad money (M4) supply. This December its volume fell by 2.5% compared to the same month last year. It's too bad, especially with almost 4% of inflation last year. The Bank of England once said that the money supply should grow by 5% per year. King, do your bit!
USD/JPY
The Japanese currency continues strengthening against the dollar. Commentators have already floundered in explanations. Some say that this is because of the concern over Europe (however, such risk-sensitive assets as the aussie and Kiwi are growing). Others are more inclined to see the reason in the general dollar weakening and sagging markets. But then it's really surprising that the yen has been strengthening for 5 days in a row, while the markets have been sagging more than moderately during this period and Asian bourses have even grown after Chinese PMI data today. Most likely, the cause is to be sought in the capital repatriation, so the pressure on the yen may continue for the whole February until the Ministry of Finance starts to actively counter the process. Level 76 has not been reached yet, but it excites great interest (today trading is conducted around 76.20).
gold
December was a terrible month for gold. And January was just the opposite. Last month gold managed to win back 99% of the positions lost in December, having climbed to the 1738.50 level on close yesterday. As expected, the level of the 200-day moving average worked well. After it became clear that the metal went far away from that mark in the middle of the month, the number of gold buyers increased significantly. Gold, this mega-bubble as Soros calls it, maintains its trend rate of growth. Is there anyone to fight down this bubble? Even Soros does not play against and stays aloof. Look closely at silver as well, the metal is now trading at 33.25, and its 200-day moving average is now at 35.25. Probably, there will be a break soon.
