EUR/usd
The market lingered for a while, but eventually came to the conclusion that we described in our previous review. The Fed is expected to extend QE in order to reduce the pernicious effect of the Operation Twist expiry at the end of the year and avert the possible negative consequences of the fiscal cliff. Actually, the US congressmen are lucky to have this kind “Helicopter Ben”, who is always ready to come to the rescue and ease the pain from their own irresolution and failures. For comparison, the ECB's head, Mario draghi, agrees to support the financial markets of particular countries only if the latter do something in return. And if the US officials at least make some hints that they are busy with seeking a compromise, the markets are already happy. With the second point there's always some skidding, but still there are fewer and fewer doubts that the Fed will expand QE at tomorrow's meeting. Moreover, it's quite possible that we'll hear some positive forecasts regarding the performance of the US economy next year. On the whole the markets are far from the rally of risky assets, but we can't but notice the steady purchases on the dips. Here we'd like to draw your attention to eurusd. Yesterday the euro zone mainly suffered bad news: Italian and French manufacturing production has shrunk; business and consumer sentiment indexes signaled a deeper recession; inflation in Greece has declined just by 1% y/y against 2.2% across the euro zone. The German trade surplus didn't meet the expectations and thus marked the second month in a row with a decline, caused by the decreasing commodity turnover. And against all this background the volumes proved to be enough to purchase the euro without letting it drop below Friday's lows. We can only guess whether it was the work of one of the CBs (say, by the Chinese, Japanese or Swiss one) or of the investment funds. Now only one thing is clear: there IS a buyer and this buyer is determined to make another try and push the pair above 1.30 and probably even test 1.31.
EUR/GBP
Yesterday's purchases of the euro don't look that impressive in the pair with the pound. Here the upward move of the single currency looks more like a modest retracement after the powerful three-day rally. This has been an especially surprising thing for the last two days, when Britain almost hasn't released any news and those two, which were published, could hardly encourage the markets. The employment confidence index that was released yesterday declined against the levels of the previous month, but yet remained in the uptrend. Today's RICS house price balance has shown strengthening of the bearish sentiment. The indicator dropped from -7% in October down to -9% in November, despite the forecast that it would grow to -5%. Well, the recovery of particular sectors in Britain is going on much slower than has been expected for many years.
USD/JPY
The Japanese yen has gone sideways. Most likely, we shouldn't expect any moves here till the next week, when the election results are announced and politicians present their plan of how to end the budget deadlock. Now usdjpy is right in the centre of the three-week trading range, i.e. at 82.30. And for now the best strategy is still to speculate on bouncing off the channel bounds.
USD/CAD
The Canadian currency is steadily appreciating against the greenback. For the most part it's been caused by the BOC's confidence about stabilization of the macroeconomic indicators and by the following favourable employment release on Friday: employment grew by 59,3K, with 55.2K belonging to the full-time employment. usdcad has been on the decline for four weeks in a row and still runs the risk of sinking lower.
