EUR/usd
The euro is slowly but steadily recouping its losses against the dollar. The single currency is oscillating around 1.3255, but can already boast a series of rising lows. This means that the currency is bought on the dips and that it is ready to take higher levels. As to news, Spanish appeal for mercy is of real interest. Spain's Prime Minister asked the EU to raise the budget deficit target from 4.4% to 5%. Rajoy called it impossible to reach such a tough budget austerity. He is right, but all this suggests that the EU's numerous concessions to Greece take their effect now. The precedent is set and now each troubled country will try to better its lot, asking for a bigger piece. The market has generally ignored this news, trying to concentrate on the positive aspects. The demand for risk continues to gain momentum, which cannot but result in strengthening of the single currency in the long run. This state of affairs is also supported by the U.S. statistics. The housing market in the States demonstrates a greater vitality than before. In January the secondary housing market showed the sales growth by 4.3% up to 4.57 million at an annual rate. This is the highest sale pace since May 2010. But then the market was supported by the government, and now – by falling housing prices. The average price of a house on sale dropped to 154.7 thousand dollars, which is ten thousand less than last year's average price. Obviously, Americans are ready to buy houses, but only the cheapest ones and at historically lowest interest rates. Nevertheless, banks offer such conditions, as money in the markets is relatively cheap.
GBP/USD
The sterling received a serious blow on the publication of the MPC meeting minutes yesterday. In the minutes it was said that two members of the monetary committee advocated a greater expansion of the programme. Most likely, these 50 billion pounds won't be the last ones. It is of interest that some members of the Commission have acknowledged that the effect of the programme won't be as strong as in the beginning. But does it mean that the programme should be extended on a larger scale? Scarcely. It just prepares the public so that it doesn't blame the Bank for almost zero results then. Simply put, if the Central Bank hadn't bought gilts, the country would have to pay higher rates on its debt, which is not very pleasant at the time when every penny counts.
USD/JPY
Japanese yen crosses have been steadily rising for 6 trading days in a row. EUR / JPY has been growing almost since the beginning of the year and has climbed from the dangerous zone near 97 to the current 106.50 level. At present, the 200-day moving average is passing through the 107 level, which can be broken if the single currency manages to speed up in other markets. As has been mentioned above, the euro has this potential. The yen has significantly added against the sterling as well, but because of the weakness of the latter the pair has been making no headway recently. As we mentioned yesterday, JPY looks heavily oversold against the dollar on short-term charts, but this overselling is compensated by the correction in other equally important crosses.
AUD/USD
The aussie is now recouping its Wednesday losses, rising to 1.0670 already. Disagreements within the ruling party, caused by the record decline in popularity of Labourists, pose a real threat to the Australian currency – the uncertainty on the political arena forces traders to be careful with their bets on the currency. Besides, it should be kept in mind that China continues to slam on the brakes and the major developed countries keep implementing stimulating policies to evade recession.
