EUR/usd
Yesterday growth of the euro wasn't that fast, but nevertheless the currency hit a new local high. The market caution is a bit frightening. The previous wave of growth at the beginning of September was much stronger. The high set in that move makes 1.3171. The bulls, which yesterday pushed the pair up to 1.3138, will hardly go down without a fight, that is without an attempt to enter the zone of triggering stops. This caution of the markets is connected with the upcoming EU summit. Actually, the latter isn't expected to bring anything new, except for the already known facts. At the beginning of the week Merkel and then her party made it clear that they do not refuse providing a preventative credit line for Spain. This surprising kindness of Madam “Over My Dead Body” takes off much of the intrigue. We still feel bullish about the single currency and also have to acknowledge that stock markets are growing not without reason, which was doubted earlier. The demand in the markets exists due to rather good corporate reporting, in the financial sector as well. The financial companies, though being branded as the root of all evil, very often prove to be a good leading indicator for the whole economy. The good reports of the banks give an idea of the recovery of lending in the USA and this is likely to boost the economy. Best of all it is seen in the real estate industry. Yesterday's data on housing starts and building permits turned out to be the best for the last four years. The number of housing starts has grown by 15%; in quantitative terms it makes the pace of 872K houses per year. Yet, just 13 months ago this indicator was 580K. It is particularly good that it's not the first month that we observe the upward trend.
GBP/USD
The sterling has taken up even a more defensive position than the euro. Yesterday the pound didn't manage to fight for 1.62, having reversed near 1.6180. Then at night and during the Asian session today the British currency lost most of yesterday's gains. Yet now there are some signs that growth may recommence after consolidation a bit above 1.6120. Anyway, EUR/GBP managed to take advantage of the short-term weakness of the sterling and consolidated above its 200-day MA, which is now at 0.81111. It is also quite likely that the pair will consolidate for some time against the background of profit-taking, yet in the mid-run it has a considerable potential to grow.
USD/JPY
Have the Japanese politicians really mustered up some courage? Yesterday it was reported that there in Tokyo it was discussed what measures to take next to weaken the domestic currency. That news inspired the bulls, which were about to give up the initiative. Now USD/JPY is trading above 79.0, which hasn't been seen in the last four weeks. But even then the pair kept at this level just for a couple of hours. More or less considerable time the pair spent there in August – from 16th till 22nd. If we look at the pair from the technical side, it looks overbought.
USD/CHF
Weakness of the dollar proved to be favourable even for the Swiss franc. The latter grew to 0.9230 against the dollar and this is the lowest level since May. Having mirrored the single currency, the franc managed to go below its 200-day MA and bounce off this level at the beginning of the month. Thus, there are no visible obstacles to the decline of the pair below 0.90. It is right the zone where the pair consolidated at the beginning of the year.
