EUR/usd
Bernanke speaks in Jackson Hole today at 14.00 GMT, however the markets have already fallen just to keep on the safe side. We can't say that there is some stunning news for the USA or extremely bad news for Europe. More likely, the markets have arrived at the same conclusions about the coming data as we did yesterday. Forex received a strong impetus towards the growth of the dollar. The euro/dollar slumped from 1.2550 to 1.2485. Of course, in the period of normal market activity we wouldn't notice this movement, but yesterday's drop looked really striking against the background of slack trading in the previous days. Yet, the speed of the drop is impressive. The whole thing took less than an hour. It could have been caused by triggering of a big stop order, which provoked triggering of other ones. At night the pair attempted to correct this fall and get above 1.25. At the moment trading is again below this psychologically important mark. Money is back to the market, but is still stored in the form of pending orders, which can start closing already this afternoon. Technically the pair has been in the upward channel for more than a month, with the highest point around 1.26 after the low of 1.2040 in mid July. Today it depends on Bernanke whether the pair will leave this channel or not. The lower boundary is passing through 1.24. There we can get only in case of an extremely tangled commentary of the Fed's chairman. We still stick to the opinion that neither today nor at the weekend the markets will see any clear signs of readiness to act in September. The most we can expect is the loan support programmes at one of the two conferences later this year, in October and December. We believe that QE is likely to be launched in December. At that time we will know who will be the president and what policy will be pursued (this is about the concern over the fiscal cliff).
GBP/USD
From the market analysts we may hear the opinion that the pound has tried to imitate the dollar this summer, being urged to grow by the weakness of the single currency. Probably, this period is about to end. The thing is that the stability of the pound was observed together with the inflation slowdown in the country. Now inflation in Britain can again prove to be higher than in most other developed countries, at that demonstrating rather dubious components of growth. At a stretch this situation can be defined as a moderate stagflation: the absence of growth and decline at the high rate of inflation. This is a good way to reduce the debt load. If the Bank of England is deliberately implementing this policy, then it mainly takes care of households. The markets are more than willing to buy the debts of the British government.
USD/JPY
Japan and deflation are still two inseparable notions. After cautious attempts this spring inflation is again negative. It would be funny if after the announcement of inflation targeting at the time when inflation was at its highest point, the bank of japan all of a sudden completely forgot about this now in the middle of the year. The true thing is that the CB simply hasn't taken any attempts to change the situation, and this is what the members of the Japanese opposition blame the government for now. It seems that twenty years of stagnation haven't taught the country's authorities anything, they still believe that the situation will settle on its own. In the meantime the industrial production in the country has declined by 1.2% in July against the expected growth by 1.7%.
AUD/USD
Yesterday's short-term growth impulse in the dollar played a nasty trick with the aussie. The dollar's rally occurred right at the moment when AUD/USD was trading around a very important mark of 1.0330. Soon the pair went below 1.03, which means the break of the 200-day MA and going beyond the limits of the average correction range, observed since the second half of the previous year. The future of the Aussie in the coming weeks can prove to be really unenviable. Well, will the players venture a test of the parity?
