EUR/usd
The market optimism was growing all through the day yesterday, which is clearly seen in several asset classes. For instance, eurusd grew above 1.28 during the US session, though had started the day below 1.2750. That optimism was caused by the increased hope for the successful competition of the fiscal cliff talks, which in its turn arose on Obama's confidence about coming to terms with the republicans. The market reacted as if the politicians had never thrown about such assertions, which further proved to be just empty words. Later the market ardour was cooled a bit by the news that Moody's cut the French rating. One of the core EU countries got deprived of its AAA-rating. Actually, it's quite remarkable that since the beginning of the previous week the country has received so much attention from the world investors. This run of things is likely to distract the markets from the problems in the USA, where the delay in solving the fiscal cliff issue may also entail rating cuts. The logic prompts that the USA will stay without the triple-A rating, while France, Germany and Britain will enjoy it. Thus, in the near future we can expect that the rating agencies will again come into play. For Greece, as usual, a temporary deal. Reuters says that we should expect the money allocation to the country, but not till December, yet the deal on debt reduction is still discussed. Thus, Greece remains a ticking bomb, which may blow up at any moment. From the technical side, yesterday the single currency received a hard blow just when trying to break through its 200-day MA. No one said that the bears would yield easily.
GBP/USD
The British pound seems to play its own game. For instance, coupled with the dollar, it was trading in a very narrow channel yesterday, despite the surge of optimism in other instruments. Starting with this night the sterling has been making its way upwards, trading close to Monday's highs, i.e. a bit above 1.59. Since there aren't any important statistics scheduled for today, the main risks are again expected from the Continent. Interesting statistics will be released on Wednesday – the MPC's meeting minutes and the Public Sector Net Borrowing data.
USD/JPY
The Japanese yen is trading within the 81-81.40 channel. The pair has managed to avoid big retracements after the strong rally last week. We are still skeptical about the possibility to move up on mere expectations of the higher pressure from the new government, if and when it is elected. There are too many factors to coincide. Moreover, the liberal-democratic opposition, which is likely to come into power in December, has ruled the country for the last few decades. Thus, the current situation is largely their merit.
USD/CAD
usdcad has moved off its local highs, hit at the end of the previous week (1.0055). The fight for the parity was long, but the improvement of the stock market sentiment observed since last Friday helped the Loonie take the offensive. Yesterday the currency sharply dropped below its 200-day MA, down to 0.9960. It's always good when the pair pierce through the key levels. Anyway, to confirm the reversal we need to break through the support at 0.9935.
