EUR/USD
The unexpected decision of major central banks to ease the interbank lending by means of Libor-OIS swap rate reduction by 50 basis points caused an impressive rally. By the end of trading on Wednesday, shares of financial companies went up by about 6%, S&P 500 grew by over 4%. An hour after the announcement the dollar index fell by 1.3%. This is a serious movement as it poses a significant risk to the technical picture of the dollar growth in November. eurusd pair which showed the intraday low at 1.3260 after the decision immediately soared up to 1.3530. Lately, the market calmed down and began to trade in a narrow range around 1.3440. The euro is being traded at this level now. In our opinion, coordinated actions of central banks are likely to change the present-day situation in the market for some months to come, spurring a serious demand for risky assets and harming the dollar. The dollar index has formed a double top near 79.70, which may become the starting point of a reversal. Yet there also has formed something like a support line in the slightly upward trend through the day closings of January 10 (1.2945), October 4 (1.3175) and November 25 (1.3237). Earlier the coordinated actions produced a lasting albeit intermittent rally in the market, a significant increase in commodity assets, including the euro appreciation. Assuming that the market is tending to reach round figures by the end of the year, we can now expect the EURUSD exchange rate to occur at around 1.40 at the end of December (though it was previously expected at 1.30).
GBP/USD
USD/JPY
Yesterday usdjpy went down against the backdrop of the dollar downing and despite the strengthening of stock exchanges. Bad news about the dollar caused the yen buying with the drop of the pair from 78 to 77.30 at the time of the announcement. However the continued stock indices rise in Asia is spurring the buying of dollars for yens thus contributing to the growth of the pair. It is likely that the yen will be among the first to give up its gains on the dollar. Already now the pair is at 77.70 and if there isn't any terrible news from Europe, we will be expecting the strengthening of the USDJPY by the end of the year.
AUD/USD
Yesterday aussie experienced a dizzy rally on the news from the major CBs. The battle for parity for now ended with the victory of bulls as audusd soared to 1.0327, although its intraday low was at 0.9942. As earlier the Australian dollar remains the choice of guys with iron nerves. Swings in each pair have exceeded 10% within the last four months. And now if there the dollar declines and commodity assets rise, Aussie will face big purchases on rising metal prices. So, there will be no need in a prolonged round of rate reductions. As far as the close-up perspective is concerned, we still believe that the next week meeting will result in rate cut of 25 bps down to 4.25%. Some analysts have previously forecast a rate decrease to 3.5-3.75% by the middle of the next year. Now, perhaps, they may change their views.
