EUR/usd
The US dollar continues the retreat started on Tuesday. The currency is declining while the markets generally remain optimistic, thus generating demand for risky assets. Yesterday's data on investor sentiment supported the markets. Conference Board's Index of Consumer Confidence has exceeded everyone's expectations, having risen to 70.8 in February, the highest level in a year. The data on Durable Goods Orders and the S&P/Case-Shiller Home Price Index proved to be a bit disappointing. However, the orders largely increased over the previous months (4.2% in November, 3.2% in December), so together with the 4.2% decline in January the figures have restored to the trend levels. Housing prices in the U.S. remain low or in the downtrend. But it is no news as this trend has already been indicated in other reports. The Americans are not very enthusiastic about purchasing single-family homes; they look for more affordable offers, despite the low interest rates on mortgages and the opportunity of a lower down payment. Europe still remains in the limelight of traders and investors. Today we'll see the results of the ECB's 3-year auction repos. The sums close to the previous LTRO levels are seen as the most favourable for the markets. High figures will reflect the need for serious refinancing in Europe, and low ones will generate fears that the situation won't change much in the long run and that the banks will remain highly dependent on the goodwill of the markets.
GBP/USD
The British pound managed to rise to 1.59 during yesterday's trading, as we promised. Today, it is already trading above the 200-day moving average, which is actually the middle level of the year. It is a very good signal for institutional investors, who can continue purchasing the pair and drive it higher. In last year's November the consolidation in the sterling was carried out around 1.61. Today's statistical data are unlikely to support GBP / USD. Consumer sentiment figures from GfK have come out earlier in the day: in February the index remained unchanged at -29. The worsening of expectations in Britain was offset by a higher appraisal of their own finances and economy as a whole. Soon the markets will see data on borrowings. Even if the number of mortgage approvals will go up within the trend, we shouldn't count on a dramatic upturn.
USD/JPY
The Japanese statistics have managed to maintain the positive sentiment in the markets. Preliminary data on industrial production in February have showed a 2.0% increase, which is more than expected by economists. Quite a good progress has been reported in construction (the 24.6% increase in construction orders y/y) and vehicle production (the 18.6% increase y/y). Nevertheless, the general weakening of the dollar does not allow for the USD/JPY growth. Just like a day ago trading is conducted close to 80.30. There is a strong correlation between the currency rates and bond market yields. The lower yield on U.S. treasuries reduces the spread between the Japanese and American equivalent securities.
AUD/USD
Earlier today the Australian dollar has managed to break above the 1.08 level, which is located in the upper part of the February trading range. Thus, the market has recouped the correction after the stormy rally and is ready to attack new highs if the external situation doesn't impede it. If events unfold in the favourable way the pair can aspire to retest the 1.10 level, which the aussie was trying to reach in late July 2011.
