EUR/usd
The day which had promised to be quiet turned into a big rally for the stock exchanges and risk-sensitive currencies. The rally was spurred by Obama's assurances that the fiscal cliff issue would be settled in the near future. As a result, S&P closed six sessions in a row with significant gains, though on Wednesday and Thursday it looked as if the growth impulse petered out. As expected, the struggle for 1.29 in eurusd was rather fierce. Eventually, at the height of the EU session the bears gave in, thus allowing the pair to grow further. The euro had almost managed to reach 1.30 by the end of the day, but now we can observe a certain retracement, which has taken the trading to a bit lower level – 1.2950. It's quite possible that the struggle for 1.30 will be more violent than for 1.29. It is an important psychological level. We can track some dependence here. The single currency trades above 1.30 when the performance of the European and global economies is expected to be good. Trading between 1.20 and 1.30 is peculiar to the periods of uncertainty, when the situation in the USA is less negative than in Europe and China. And the drop below 1.20 is typical of the periods when the EU sovereign debt crisis is especially severe and when there is a real threat that one or more EU countries will disintegrate. The situation around Europe may clear up already this week. It's better to be cautious with all this growth since it is happening on the hopes that the politicians will take correct decisions in due time. Over the recent years we've lacked both. The number of long speculative positions in the stock exchanges due to the depreciation of the index is really impressive. Very often the market turns in the opposite direction in such cases. It is quite logical: what can make you buy and push the market upwards, if everything is already sold?
GBP/USD
Friday's anti-rally of the dollar took place both in the pair with the euro and with the pound. The latter dropped sharply against the euro on Thursday and on Friday the pair was falling on the demand for the pound. The upsurge of GBP is clearly seen in the 4hr gbpusd charts. Over a short period of time the pair managed to tear off the lower bound of the upward channel. It let the cautious bulls catch a break and start taking their profits, which they keep doing now. If the pair doesn't come across active selling, it will continue appreciating.
USD/JPY
As to the Japanese yen, it seems to be confused about how to behave. The rally of the stock exchanges was supposed to support the growth, however earlier the pair had also been oversold. It can well be the case that the pair will keep retracing, at least down to 82.0 against the current level of 82.10 and the last week's high of 82.83.
USD/CAD
The canadian dollar was in good demand at the end of trading on Friday. The pair fell from 0.9970 down to 0.9910, though it had been standing aside for the most part of the week. If we look at the Loonie as an indicator of the US trader sentiment (safety/risk), we see that here the risk-demand is much higher than in the EU currencies. After the rally the Canadian dollar has retraced a bit and now again close to the highs. The parity still holds.
