EUR/usd

The Fed managed to surpass the market expectations. Yesterday the fomc announced that it would purchase the Treasury securities with remaining maturities of 6 years to 30 years and sell or redeem an equal par value of Treasury securities with remaining maturities of approximately 3 years or less. There is about $267bln of such bonds on the Fed's balance. The first round of the programme consists in the redemption of 400bln and was to be finished by July. Yesterday's decision is accounted for by a rather weak economic dynamics over the last few months: job growth has slowed down, spending has shrunk. The paradox is that the slowdown ran parallel with the initial stage of the programme, which, probably, is the best illustration of its effectiveness. On the whole, we can say that the current economic situation depends largely on the business sentiments, which in their turn are also connected with the market dynamics. The programme of substitution of short-term bonds by long-term ones helped to restore confidence for a few months and as a result spurred the growth. Meanwhile, Europe cherished hopes that the debt restructuring would be an effective remedy for the European debt crisis. Due to all that the market dynamics improved greatly and the job growth proved to be really impressive. There is a chance that in the coming months the markets will demonstrate a good growth as well (it won't be very difficult after the heavy sales in the second quarter). This also carries the potential of the dollar depreciation. Yesterday's reaction of the market was roughly in this vein. The initial disappointment was followed by new purchases of risky assets; the euro/dollar continued its moderate upward trend.  And though this morning the pair fell below 1.27, this drop still was within the established ascending channel. As has already been mentioned, it is not clear yet if this trend will give rise to a continuous wave of growth or will just turn into a bounce after the sharp decline in the previous months. Probably, no one knows this for sure, as too much depends on the behaviour of politicians now.

GBP/USD

There is a feeling that the sterling-bulls still keep control of the situation, but allow the bears to play with the rates a bit. Yesterday the pound/dollar performed two sharp drops which less than in an hour ended with the return of the rates to the old levels. The first sale was caused by the simultaneous publication of the MPC Meeting Minutes and employment data. The second one – by the Fed's decision to extend Twist just by 267bln. As has been surprisingly stated the minutes, the asset purchase programme was kept at 325bln by a close vote of just 5 to 4. As far as employment is concerned, it became known that the claimant count has grown by 8K against the expected 3K. At that moment the cable charts showed a long tail in the candle (down to 1.5650), which appeared again on the release of the FOMC's commentary. The pound recovered then, but today its dynamics looks more sluggish. It seems as if the bulls' strength was draining away.

USD/JPY

Yesterday the yen traders suddenly realized that the cut of dollar interest rates would give the markets a chance to grow and therefore would make it possible to use the yen as the funding currency. Anyway, yesterday afternoon, before the Fed's decision was published, the USD/JPY rate was growing. From the daily low of 78.80 at the beginning of trading, the pair rose up to the current level of 79.60. For the rest of the currency pairs this movement could hardly be called impressive, but for the half-dead yen it was an opportunity to enter the area of highs reported during the last decade of May and the first half of June. Let's wait for further growth.

AUD/USD

Yesterday the aussie bulls said something like “that's enough”. The strong upward impulse, which had driven the pair above 1.02 from 0.9580 (on June 1), came to an end close to the 200-day moving average yesterday. As has already been mentioned, while the economic affairs look rather good, the housing market, external and internal trade are sending SOSs, which is also seen in the leading indicators. Probably, the Aussie will lose some of its luster in the coming weeks.