EUR/usd
Generally, when markets grow the dollar falls. However, there can be rare exceptions to this correlation. And now it seems to be the case. Last night the Federal Committee published its monetary policy statement. On the one hand, the markets got the expected commentary. The data on the labour market finally convinced most analysts that the economy is on the mend, although the recovery is rather slow. Such sentiments are supported by the increase in the consumer sentiment (and consequently in spending) and by the production growth. So, the markets wanted to hear this from Bernanke and Co. and they did. As a result, the dollar as well as the stock exchanges rallied. Since concerns around Greece have subsided, the markets have a chance to give a closer consideration to the economic outlook. And here, as is often the case, the U.S. economy is the first to decline and recover. While Europe is suffering from fiscal austerity and prolonged recessions in the peripheral countries, the U.S. economy tends towards trend growth rates. And this means that the monetary policy toughening will first take place in the U.S. and only then in Europe. The ECB's balance sheet already contains the sum equivalent to $ 3 trln., which is far beyond the Fed's parameters. Overnight the euro fell down to 1.3030. Market participants less tend to expect the further QE from the Fed now, and the inflation rise, triggered by the surge of energy prices, boosts the yield growth of U.S. government bonds.
GBP/USD
The British pound was moving along quite a bumpy road yesterday. In spite of quite positive data on the trade balance (yesterday we mentioned that the statistics came in better than expected, but on the whole it doesn't suggest any significant shift), at the beginning of trading in London the pound went through sales as a result of the capital outflow from the European currencies. However, traders were rather quick to realize that the euro area issues are only indirectly related to Britain and eventually generated a fairly strong movement in EUR/GBP. The pair fell to the support level of a bit below 0.8330. Well, will market participants be strong enough to continue selling euros for pounds? The answer to this question is seen in today's statistics on the British labour market. Although analysts didn't expect much from these data, the fact itself has proved a bit disappointing. The data on Claimant Count Change has come in at 7.2K after 7K a month earlier. The Claimant Count Rate remains at 5% and Unemployment Rate – at 8.4%. The most disappointing data are on earnings. The Average Earnings Index (including bonuses) has dropped down to 1.4% y/y against 1.9% a month earlier. Remember that the inflation rate now makes 3.6% y/y, which generally implies deterioration of living standards and further cuts in spending.
USD/JPY
“Higher, and higher, and higher”. This is the motto the USD/JPY traders seem to be guided at present. The dollar was bought not only for the euro, but also for the yen. It's of interest that the EUR/JPY cross has been hovering around 108.50 for four consecutive days. Meanwhile, the dollar has gone up to 83.10 against the yen. This is the 11-month high. Last year the pair went so high only as a result of the BOJ's intervention to prevent a sharp strengthening of the yen on the capital repatriation. When will this stunning growth cease, we wonder?
AUD/USD
It's possible to say that the Australian dollar doesn't have the faintest idea where to go now. For one thing, markets are growing and market participants are cherishing greater hopes for a stronger growth of the global economy in the coming quarters. And for another the dollar is strengthening. As a result, the aussie has been hovering near the level of 1.05 already for three days in a row. At the same time, its fluctuation range is gradually getting narrower. This may spill over to a breakthrough in one or the other direction. Provided that the positive sentiment persists in the markets, the AUD will likely break up towards 1.10.
