EUR/usd
The persistent buying of the single currency yesterday let it rise to the consolidation area of Monday and the first half of Tuesday. Regarding Cyprus it is rumoured that Russia is negotiating buying of one of the Cypriot banks or shares in several banks. Besides, they say that , letting Gazprom in, Cyprus is staking on the future earning from gas. Neither of the rumours hasn't been confirmed yet. In the meantime, the banks of Cyprus are still closed as the parliament hasn't taken any decision on the deposits yet. Most likely, Cyprus will be postponing it till all the thinkable and unthinkable deadlines. Yet, these are just mere attempts to buy the time. As if it reduced the outflow of deposits from the Cyprus banks! However, eyes of Forex traders are turned not only to this island. Yesterday after the two-day meeting fomc announced its decision. The Fed pointed out improvement in the economic indicators and progress in the labour market, but didn't show any willingness to curtail the incentives. Later in the press-conference Bernanke explained that the committee is now considering methods of gradual curtailing of the incentives. Now apart from the ZIRP we also have monthly purchases of 40bln of agency mortgage-backed securities and of 45bln of treasury notes. From the current commentaries we see that the first step on the way of the stimulus rollback will be reduction of the asset purchase programme. It will hardly happen in the coming months – Bernanke keeps the leg on the gas pedal despite decrease in unemployment. For instance, the claimant count rate is the lowest since 2008.
GBP/USD
The British officials seem to have acquired a habit of failing to reach their own targets. For many months inflation has been above the target 2% with the continuous forecasts for the quick return lower. Then there were frequent failures to reach the budget targets, when the deficit time after time exceeded the growth estimates. In addition to this we have constant downward revisions of the economic growth forecasts. All this will remain with us for some more time. In February the bank acknowledged that inflation would be beyond the target level in the medium term. The Office for Budget Responsibility yesterday again revised down the growth forecasts. For this year it is expected that it will be 0.6% against 1.2% estimated in autumn. The vital point here is the government's promise to save more, to stimulate job creation and also cut the corporate tax to 20% since 2015 by increase in bank taxes.
USD/JPY
The speech of the new head of the BOJ is scheduled for today. Kuroda's comments on the monetary policy may produce strong volatility in the yen. For the yen to be sold further there should be promises of concrete incentives. The current QE programmes proved to be unable to revive the economy. The period of trade deficit in Japan has been too long, we'd say, the longest in the last three decades. The relatively good point here is the continuing growth of imports as this inspires hopes for the better activity of producers. Meanwhile, usdjpy keeps moving up to the upper bound of the trading range. Last night the pair was even trading above 96.0 for a while.
NZD/USD
New Zealand demonstrated an impressive economic growth in the fourth quarter of the previous year. According to the published data, the GDP growth made 1.5% against the forecasted rise by 0.9%. By the fourth quarter a year before growth had amounted to 3%, being the strongest one since 2007. After the release of these stats the Kiwi shot up and closed the gap of the beginning of the week. Now the New Zealand currency is consolidating at 0.8260 and it still has to prove its ability to tear off the 200-day MA (which is now at 0.8193).
