EUR/usd
Spain faces a difficult task, but, in our opinion, Rajoy's government has taken the right approach to the deficit reduction issue. Next year's budget, which was published yesterday, focuses primarily on the reduction of the government spending instead of the tax increase. Cutting the government spending by 7.3%, Spain supposes to save €13bln. It's important that this scheme of deficit reduction goes in line with the EU bailout terms. Thus, Spain formulates the fiscal policy, which beforehand presupposes the turn for help from the outside. Otherwise, it would be necessary to revise the budget in a few months, which would only make the markets more nervous. The initial attack of sellers was repulsed and the single currency reversed from 1.2830. Thursday was closed out above 1.29 and now trading is held around 1.2930. It's remarkable that the upward move was supported by other markets. This strengthens our confidence in the idea that the decline, we've observed in the euro over the last two weeks, is a mere retracement rather than a new bearish wave. Then it's noteworthy that the US markets should grow despite the revision of the GDP for the second quarter from 1.7% to 1.3%. This revision serves as a clear reflection of the even poorer data on personal consumption expenditures. Then, the news about the sharp decrease in the durable goods orders could hardly inspire the markets either. This index with aircrafts included lost 13.2% last month and with this volatile industry excluded the drop made 1.6% in August after 1.3% in July and 2.2% in June. Even the housing sector didn't bring any encouraging news. The pending home sales decreased by 2.6% last month against the expected decline by 0.4%. The annual growth rate remains rather high (9.6%), though is already unable to go above 15%. Thus, with risks connected with Spain becoming less serious, the markets continued growing despite the disappointing statistics.
GBP/USD
One of the major beneficiaries of the renewed risk demand is the British pound. The growth we described a day ago lasted all day long and continued this morning. At present the local high of the pair is 1.6271, which is just 30 pips below the highs hit on September 21 and April 30. The British economy did surprise the markets, showing a 0.4% decline against the expected 0.5% in the second quarter. Notwithstanding this fact, the situation with current account is getting worse. In 2Q the index demonstrated a deficit of £20.8bln against 15.4bln in 1Q12 and 7.2bln in 4Q11. The BOE and the government would be still happier with a lower rate of the sterling and more competitive production.
EUR/JPY
The yen-bears seem to feel their impunity. USD/JPY dropped to 77.50 on selling of the greenback. Strengthening of the yen coupled with weakness of the euro has already driven EUR/JPY to 100, though yesterday's growth of demand for the euro helped the pair stay above this psychologically important level.
gold
The weakness, Gold demonstrated two days ago, was deceptive. Already yesterday the greater part of Wednesday's losses was recouped and the rates went far beyond those levels. Now trading is held at 1780, which, if we except two hours of trading on September 21, is the highest level since last February and is very close to the highs of November 2011.
