EUR/usd
The single currency still cannot start growing. Yesterday's consolidation of EUR/USD with purchases on the decline below 1.2850 was sharply broken by the S&P's message about cutting of Spain's rating. Now it is just a step above the dust heap. As emphasized by the rating agency, the entire blame lies with the poor economic growth and inability of the government to handle the situation. But we know that these things are closely connected with each other and that the poor economic growth feeds itself in the environment of fiscal austerity: the economy gets worse, entailing plunge in tax receipts and increase in spending on unemployment benefits. For this reason it would be better for Spain to receive an amnesty from the fiscal austerity. Take the USA and Britain as an example. The housing crisis there is as serious as in Spain, but the opportunity to go through the government deficit growth quietly distracted the market's attention from this issue. Last spring there was a remarkable moment when the British government bonds served as a safe haven from the storms of Mainland Europe. Yet the budget deficit of Britain is much bigger than that of Spain. The same about the USA, which hasn't paid due attention to its deficits and actually doesn't do that now (individual statements don't count, we are talking about actions). Thus, investors from all over the world will blame Premier Rajoy even more for the unwillingness to ask the EU for a bailout. The flight from peripheral assets to the assets of the core countries is again gaining pace. It is clearly seen in the growth of the Italian bond yields, published yesterday (from 0.7% to 0.765% in the 3-month bonds and from 1.692% to 1.941% in the 12-month ones), in comparison with the decrease in the yield of the German 5yr bonds from 0.61% to 0.53%. However, for fairness' sake we should mention that “good” and “bad” assets are now far from the extremums, they showed in summer. Eventually, the news from S&P put a pressure on the euro, pushing EUR/USD down to 1.2825 last night. Yet purchases on the dips have brought the euro back to 1.2950.
GBP/USD
The sterling makes it clear that it completely doesn't care about all that agitation about the single currency and keeps consolidating at 1.60. Neither bulls nor bears have any sound reason to start moving. There weren't any important statistics for the sterling yesterday, and today we don't expect any vital news either. In the meantime the euro/pound is falling, having already returned to 0.8030. The 200-day MA wasn't easy to break through, the bears reversed the pair at 0.81, just 15pips from this important level. EUR/GBP will be able to resume growth only if the pound breaks the support of 1.60 against the dollar and starts falling down on the avalanche of triggering stop-orders.
USD/JPY
After a certain hesitation on the commentaries of Tokyo officials a couple of days ago, traders have again resumed selling of USD/JPY. By now the pair has fallen below 78.0 and is very likely to slip down to 77.60. The poor news on Spain and safe-haven flows play right in the hands of bears. Anyway, don't get carried away by selling USD/JPY, if it gets below 77.50 it will be more reasonable to stay away from the market and get ready to buy.
AUD/USD
By the way, as to safety. The aussie still managed to reverse up, proving that it can also be regarded as a safe haven. The support at 1.0150 proved to be strong enough to reverse the pair for the third time. It is remarkable that the Aussie was growing against the background of declining stock markets and selling of the euro. If the situation gets a bit more optimistic, the currency may start growing even faster. Will the 1.06 remain the strong support as before, we wonder?
