EUR/usd
At first sight the current picture is not that bad. The markets have been growing for two consecutive days. Moreover, yesterday's after-sale moderate purchases at the bottom have been followed by quite a confident leap in stock prices. Partly the demand for risky assets can be explained by the recent commentaries of Fed's officials. Thus, if last week and the first half of this week abounded in hawks' speeches, the last two days have been rich in the statements from more moderate representatives of the fomc. Yesterday the markets breathed a sigh of relief when Sarah Raskin spoke about the Fed's readiness to further support the economy and some other reassuring news. That was a good addition to the earlier statement of Janet yellen who also pointed out that the CB was “quite willing” to make further asset purchases. Of course, the Fed's ranks are not serried. For instance, Plosser wishes that the CB didn't set any definite targets in regard to the monetary policy and acted depending on the situation, while Dudley mainly focuses on the fragility of the recovery process. Anyway, the markets have received a signal that the Fed is still considering the further measures to stimulate the economy. Meanwhile, the decreasing inflation pressure is getting obstacles out of this way. The producer prices figure reported yesterday remained unchanged in March against the forecasted growth of 0.3%. In its turn it caused the slowdown in the annual inflation from 3.3% to 2.8%. By this indicator we can clearly see the even decline from the second quarter of the last year, when the figures were as high as 7.1%. The first quarterly reports also produced a favourable impact on the markets. Eventually, all these factors triggered a confident market growth, which continued during the Asian session. As we said, at first sight everything looks quite good. Still we shouldn't forget that the Fed won't dish out money and expand their balances by means of low-quality stocks for no particular reason. Very likely, without a towrope the economy won't be able to get out of the morass.
GBP/USD
The British trade balance data must have poured a cold shower over the local politicians, bringing them down to earth. The trade deficit significantly grew in February, bringing to naught almost all the modest gains of the preceding months. The Visible Trade Balance of 8.8 bln proved to be within the range of the average figures of the preceding six months, which implies no progress in rebalancing. The saddest thing is that the increase happened due to the decline in exports with imports remaining at the same levels. The most troubled direction is the EU. The growth of the British currency against the euro as well as the weakness of the continental economies have caused the drop of demand for British goods. There are fewer and fewer reasons for the BoE to refrain from the further extending of the QE programme. The current round ends this month and in May it has to be decided whether to continue the stimulation or not. As observed, the earlier purchases produced a much stronger effect on the economy than the further ones. Anyway, there are no other alternatives. The government has very limited opportunities to stimulate the economy and concentrates on maintaining of the market confidence in the budget stabilization means.
gold
Gold keeps clambering up as further QE has appeared on the horizon. Will Gold again become a refuge from the fiat currencies? Gold beetles say that the metal has just corrected and become good for buying, but a part of this correction is already over. Let's see what will happen next– it's too often the case that Gold dives below the long-term trend line. Now it is also there at $1675.
AUD/USD
Yesterday the aussie was like a real express train. Not long ago this oversold currency was looked upon as prey of vultures, waiting to buy it below 1.03, but the strong data on the labour market together with the higher inflation expectations supported the growth. The labour market situation was minutely described yesterday, but we've overlooked the Melbourne Institute survey, reporting that consumers estimate the annual price growth rate at 3.3% in April, which is much higher than last month's figure of 2.7% and February's one of 2.5%. There is a chance that the RBA won't have enough room for cutting the rate in May. All this and the stocks rally considered, the markets performed an almost incredible rally: AUD/USD was systematically growing all day long, making its way from 1.0290 to 1.0450.
