EUR/usd
Yesterday eurusd spent the whole day between 1.3260 and 1.3320. As we said earlier, the markets are set for consolidation after the strong growth, however it's really hard to find a reason to purchase the dollar. The Treasury has sharply decreased borrowing in the markets, which in its turn makes the need to purchase the dollar less strong. Besides, the EU peripheral debt markets are again attracting capital since yields are now back to their normal levels. In the news background Germany's economic outlook for this and next year is of interest. If the outlook is correct, the EU locomotive will suffer a further slowdown. In 2010 the country's economy grew by 4.2%, in 2011 – already by 3.0%, last year the growth made just 0.7% and this year the figure is expected to be as low as 0.4%. Actually even judging by Germany, to say nothing of the periphery, we see how many troubles fiscal tightening brings when the consumer demand declines. Upon the whole it is anticipated that both 2012 and 2013 will be the years of economic downturn in Europe. For all that, the CBS' estimate of the situation is in sharp contrast with this forecast. Despite the reported decline of production in the second half-year 2012 and the expectations that it will continue in the first half of this year, the ECB's head is looking to the future with optimism, emphasizing that, quite likely, there won't be a further need in incentives. Yet, in December Bernanke extended the stimulation programme and promised to carry it out until unemployment falls below 6.5% (for comparison, now unemployment in Europe is 11.8% and keeps growing month by month). However, on long-term charts EURUSD demonstrates a downward trend, but even here the pair has the potential to rise to 1.37 before falling below 1.20.
GBP/USD
Looking at the sterling, it seems that it is about to start falling. The trade-weighted currency basket shows that the September growth brought the pound close to the highs of spring 2009 (if you remember, then it was a dead cat bounce after the 25% devaluation). So we expect that the weakness of Britain's economy contrasting to the current strength of the US and China will make the sterling less attractive, kicking gbpusd back to 1.50 this quarter (yet, on the way to it we are to meet a very strong resistance at 1.53).
AUD/USD
Our hopes that the aussie will get to the upper bound of the sideway channel in the near future completely faded this morning, when the employment stats were released. Earlier we observed reduction of vacancy adverts and according to the official reports the number of the full-time employed has been on the decline for two months in a row. In December it dropped by 13.8K after the decline by 6.3K in November. These figures are not the worst. Australia still has something to be proud of in the labour market, however we believe that such a poor employment release will unleash RBA's hands to cut the rate in early February. At the beginning of the week traders ignored the poor housing data, but now all remembered the Aussie and put it under a heavy pressure. We expect to see audusd near the lower bound of the channel, i.e. at 1.02.
USD/CAD
The Canadian Loonie, once so much loved by traders, has bounced off the support of 0.9830 and set out for a reversal. Quite likely, the pair will manage to cover the gap, which formed at the beginning of the year, i.e. to rise to 0.9950. The only sphere demonstrating some positive results here is the labour market. Consumption, inflation, GDP and trade balance long ago made it clear that the Bank of Canada won't raise the rate in the near future.
