EUR/USD
All that Italy didn't get went to Spain. Here we speak about the debt auction that was held in these countries on Wednesday and Thursday accordingly. eurusd reacted accurately to the markets' message. If on Wednesday it was decline due to the low investor demand, yesterday the single currency was brought back nearly to the same levels: it's again trading a bit above 1.30. Yet, it's worth mentioning that weakness of the dollar also contributed to sales of the euro. It arose on the decreased concerns that the high demand of the US households would boost price growth. As we see from yesterday's PPI, the producer prices grew by 1.7% over the last 12 months to February. It's a bit less than was forecasted by economists at the beginning of the week before the release of the retail sales statistics. Today we will get information on the consumer prices. It's quite possible that they also won't be much different from economists' estimates, i.e. the strong price growth in February won't keep the Fed worried about the price stability as the annual CPI remains around 2%. Then the UoM's data on consumer sentiment and inflation expectations will be of interest. It will be also interesting to see how the growth of fuel prices will affect these expectations. The sudden decline of the sentiment index may provoke correction in the markets, however such a decrease is unlikely now, when the claimant count remains on the decrease. The number of continuing claims fell down to the 5-year low last week. It won't be surprising if the index will continue to decline in the coming weeks. By contrast with this, the European employment stats proved to be the lowest since 1999. But who cares about this if the Spanish government bonds are in good demand?
GBP/USD
Yesterday closing of short positions in the sterling continued. The pound was growing against the dollar much faster than the euro. EURGBP has already dropped to the lows of late February-early March, and the cable (gbpusd) is testing 1.51 now. Traders took advantage of the lull in the news from Britain to adjust their positions after the 2 ⅟2 – month antirally.
USD/JPY
The Japanese parliament confirmed Kuroda's appointment as a new head of the BOJ. He will take the post on March 19 after Shirakawa's resignation. This event didn't stir the markets. usdjpy was counterbalanced on the one hand by general weakness of the dollar in the markets and on the other hand by the supposed weakness of the yen due to the growth of stock markets. It is widely rumoured that Kuroda is likely to convene an extraordinary meeting of the CB in order to expand the monetary stimulus of the recovering economy. We doubt it. Already now the 20% decline of the yen has created a good basis for activity growth.
USD/CAD
oil began to grow (mainly due to the strong statistics on the retail sales and information on decrease in inventories) and it triggered demand for the canadian dollar. Lately this country has been bringing a bit more good news than a couple of months ago. Even the drop of the capacity utilization rate in 4Q doesn't spoil the general picture. Most likely, it's because of increase in capacity ( we don't have these data, but there are statistics on the considerable growth of orders in the last months of the previous year) with the relatively steady production in that period of time.
