EUR/usd
Speeches of Janet yellen, federal reserve Chairwoman, are often full of cautious comments and are generally treated by the markets as rather dovish. Being just a certified candidate for chair of the Fed, she already maintained a softer stance than Ben Bernanke, so the markets even staked that her advent would help to stop QE reduction. This year she has aroused a fresh tide of anxiety regarding the policy toughening when pointing out that unemployment below 6.5% wouldn't be a reason to consider raising the rates. Instead the Fed began to focus on a wide range of employment indicators. Thus, Janet Yellen time after time damped down the expectations of the policy toughening. The similar situation is expected this time as well, prior to her speech in Jackson Hole following the FOMC's optimistic meeting minutes in July. Should such expectations be met, it can give speculators a splendid opportunity to lock in profits after the dollar's impressive rally this week. Yesterday we mentioned that the US currency had quite a good potential for growth. But in the meantime it should be realized that Forex movements seldom occur without pullbacks and adjustments. The markets were actively buying USD and now simply there can be lack of buyers to push the rate further up. A full-scale correction may lead eurusd closer to 1.34. But this advance will surely take longer than this day. Most likely, it will have been completed by the middle of the next week, should the circumstances be lucky. Probably, the best result that can be expected this week is consolidating above 1.33.
GBP/USD
The cable's attempts to recover yesterday stumbled over the pressure caused by the poor retail sales report. In July they grew by 0.1% instead of the expected 0.4%. The annual growth rate slowed down from 3.4% to 2.6%. But to be honest, these rates are not bad. However, it should be taken into account that the market expects that the sterling will show excellent performance across the board, which is simply impossible. Especially it is hard to expect extensive growth of retail sales against earnings stagnation. Anyway, as we have mentioned it, the British currency is very unsteady above 1.70, so selling has been lasting already for 7 weeks in a row. Yet it is true that it is not very heavy. Over that time GBPUSD has lost only 6 ½ figures.
USD/JPY
The yen has stopped falling. Bulls have simply got exhausted after the rally of almost two figures. The extremely narrow trading range has been broken. But now bulls have to deal with another difficult task – to break through the resistance at 104. Earlier, in April, they failed to do that. And even now there are grounds to believe that the US dollar will stop appreciating at least for a little while.
USD/CAD
Today there will be a lot of statistics from Canada. At the beginning of the week the pair pushed off its 200-day MA, again reversing in the upward direction and threatening to get above 1.10. This situation can be changed by the strong retail sales statistics tonight and/or by higher than expected inflation rates. Why not? In the neighbouring USA inflation is growing and retail sales remain rather good. There is a chance that the northern neighbour of the States will get out of the financial crisis bog.
