EUR/usd
Friday's data on the U.S. labor market surpassed everyone's expectations and once again proved that the U.S. currency can be a good choice to save money at this unstable time. The U.S. payrolls rose by 200,000 in December, the unemployment rate fell from 8.7% to 8.5%, average weekly hours increased from 34.3 to 34.4 and average hourly earnings grew by 0.2%. Manufacture also demonstrated a good increase in the number of jobs – 23K against the average 10K during the previous six months. Manufacture is the heart of economy and though making a rather small contribution to GDP (form 15% to 18%) remains a very important indicator of the country's health. The dollar demand grew after the publication of labor market statistics. The data from the United States were in sharp contrast with those from Europe. According to Eurostat the unemployment rate in the region remained at 10.3% in November after the period of growth since April when it was at 9.9%. This contrast may become even greater in the course of time because of large savings measures projected in different European countries for 2012. The situation around the sovereign debt crisis aggravates the uncertainty, greatly restraining lending and business investment. Last week the EUR/USD slipped lower in the downward channel which has been observed since November. The single currency dropped to 1.2666 on Monday morning, whereas on Wednesday it had managed to reach 1.3070. The meeting of Sarkozy and Merkel is scheduled for this week. If they don't surprise the public with some kind of miracle (which is very unlikely), the euro will remain in the downward channel, the lower boundary of which will approach 1.25 at the end of the week.
GBP/USD
Just like its continental vis-à-vis the British currency has come under attack on the U.S. dollar buying, though it hasn't been affected very strongly by it. That's not without reason. Even leaving aside the sovereign crisis (since nobody can objectively estimate its impact on Britain), there still remains the real sector of economy with better employment and unemployment rates than on the Continent. Moreover, the British may catch a break thanks to the inflation slowdown which will be clearly visible in the January and February statistics. We mustn't forget that the competitiveness of domestic producers has been strengthened before (the sterling has suffered a serious loss vs. a trade-weighted basket), the real income has also declined. Now if the U.S. recover with the trend growth rate (in other words, with about a 2.5% GDP growth per year and 200 thousand new jobs per month), British exporters may get a strong support which will tell positively on the country's trade balance. By the way, another portion of these data will be published this week. So far the balance of payments has demonstrated how the financial sector has been suffering; on Wednesday we will see whether the trade in goods will manage to become the engine of the British economy. If there is no sign of improvement, we'll have a reason to get disappointed in the pound and to expect further QE measures from BOE, which in its turn is sure to have a pernicious impact on the British currency.
USD/JPY
The Japanese currency followed the markets on Friday and keeps maintaining this correlation now. On Friday American and European markets were falling on the growth of the U.S. dollar, which in its turn led to the USD/JPY decline. But the most noticeable decline was in the euro/yen. The pair intensified its decline below 100, having collapsed to 97.30 on Monday morning. It is over 10 big figures lower than in November. The Japanese officials will hardly enjoy such growth of the national currency rate, as it makes the positions of its exporters worse. However, since the officials do not threaten interventions, the dollar/yen is still has a potential to go down to 76.60 from the current 76.90 level.
AUD/USD
After the growth of the U.S. dollar aussie has declined against most of its competitors. Strengthening of the U.S. currency had little impact on the AUD/USD quotes on Friday, but already with the opening of trading in Asia and Oceania, Aussie slipped from 1.0230 to 1.0150. Statistics are also of no help. Data on retail sales were unexpectedly weak, having showed a less growth in December. Sales stagnated, although economists expected a 0.4% growth. It seems that the Australians have become more cautious in connection with problems in Northern Hemisphere. And this endangers the local economy too. We again make a point that the problems influencing the Australian currency rate are mainly external, and if there are signs of stability of the Australian economy or if these external issues are resolved, the Australian currency may occur among the favorites of risk trade.
