EUR/usd
At present markets are filled with optimism. You can see it clearly in the performance of American stock markets. While S&P 500 is hovering around the highs of spring 2008, Dow Jones has gone to even greater lengths. Yesterday this benchmark reached the highest mark since late 2007. Just 6% further up and the global maximums will be hit. However, the current employment level is still too far from the levels of October 2007. According to the recent data, the number of jobs is now 4.4bln less than 5 years ago. In this situation we even cannot count much on the inflation effect as since 2007 the CPI has grown just by 9%. At the same time the corporations can hardly boast the same earnings as in late 2007. Thus, the situation is largely accounted for by occasional adrenaline injections of Bernanke. This happens every two years. Yet earlier such infusions occurred in tougher economic conditions. Both previous times inflation was about 1.1% y/y, now it makes 1.4%. Moreover, at that time the employment level declined for three and more months in a row, now the average growth is over 90K. Though the conference in Jackson Hole and the recent release of labour market statistics have almost completely assured the markets that the economy will get another portion of incentives, we believe that risks still persist. As has already been mentioned, the September QE, if nothing changes, will be launched against the background of the highest inflation level as compared with the previous episodes. Besides, the recent data on the manufacturing production point at a high rate of capacity utilization, which in itself is an omen of inflation and increase in capital spending. It would be more reasonable if Bernanke launched QE in October or December, however the matter seems to be mixed up with politics.
GBP/USD
The British trade balance came in better than expected. Moreover, the Total Trade Balance, which includes not only goods, but also services, was revised upward against the values in the previous months. So, the Office for National Statistics seems to get ready for the final GDP data for 2Q. After such a revision, we may well expect the further growth of GDP, and not only for the second quarter, but for the preceding ones as well. Yet, the sterling was given an incentive for growth even without these data – the general improvement in the markets frequently triggers growth of the pound against other currencies. Anyway, EUR/GBP still sees a tug-of-war around 0.8. As before, we stake on the euro.
USD/JPY
The US dollar is so weak that even the yen is appreciating against it. At night USD/JPY dropped below 78, which was last seen in June and before that only in February, prior to the BOJ's decision to combat deflation and target the inflation level of 1% y/y. Yet hardly anything has been done since then. If the Japanese will wait for some more time, they won't have to do anything at all. Fed's QE more than once has proved its efficiency in raising the global level of inflation, including that of Japan.
AUD/USD
In the war for the key levels the aussie gained a victory over the American dollar, being already up at 1.047. The 200-day MA has been broken through. The next important resistance is 1.06, the level which remained unconquered in early August. It's very likely that the Aussie will get there already this week. The domestic statistics are also of help here. The concerns about the housing market merge into the background, as housing starts grew by 4.6% in the second quarter. Moreover, the consumer sentiment index has also risen, having gained 1.6% in September.
