EUR/usd

On the first full trading day after the long holidays markets failed to fight down the across-the-board pessimism and declined by over 1.5 % on average. Actually, markets didn't have much choice due to the rising fears of another aggravation of the situation in Europe. In addition, hope for improvement of the exterior affairs also fades, as China's and America's economies are now slowing down as well. Under such circumstances all eyes are turned to the European politicians, who are looking for means to improve the market sentiment. For instance, the spokesman of the German ministry of finance stated yesterday that the perspectives of the euro-Zone improved for this year and Germany itself successfully got over the peak of its slowdown. To some extent they are right, especially if we take into account that in the fourth quarter of the previous year the world's largest economy lost 0.2% in GDP growth. The first quarter is likely to be marked by growth, but the question is how strong it will be and how events will unfold in the further quarters. The improvement in the European economy has already been indicated earlier by Premier-technocrat Mario Monti. But behind these words stands the desire to inspire confidence in the markets rather than the real observation of improvement. Usually the European economic cycle lags behind the US one by a quarter or two, so the region is likely to face the biggest problems  in 2-3Q of this year. Another question that disturbs investors concerns the capital buffer standards. New regulations demand the 9% increase of the capital buffer by June. However, the time limit can be extended due to the poor economic situation. Nevertheless, if the politicians say that “it's all fine”, banks will have either to attract capital or to sell their assets and reduce their loan portfolios. The price of the deal is €100bln. In fact, it will be almost impossible to attract the capital and the reduction of the loan portfolio will be painful not only for the finance system, but also for business and private sector. The only hope lies in the postponement of rebalancing. Let's wish good luck to the euro, the currency will really need it in the coming months.

GBP/USD

The British pound nearly wavered yesterday under sellers' pressure triggered by the stock market decline. At some point GBP/USD fell to 1.58 and broke down its 200-day moving average. However, already by the end of the American session and further during trading in Asia the pair found enough strength to go up in the area of 1.59, where it started this week. Bulls and bears perfectly balance each other. EUR/GBP demonstrated a short uprise yesterday on the above-mentioned statements of the officials, but then trading again went back to the lower boundary of fluctuations. Now the pair is at 0.8245. Despite our pessimism over the euro, you may consider buying the pair on the dips, but please be careful.

USD/JPY

Just as we expected yesterday, USD/JPY didn't stop at 81 and was pushed down to 80.60. However, now we can observe cautious purchases, which have driven the pair to 80.80. A slight bounce in the markets helps the pair go up now, but there is a suspicion that the yen may continue strengthening in the near future. It's of interest that EUR/JPY has reached its average annual level and is now trading around 106. Probably, the further sales of the euro will lead the pair to the 103 level or even to the retest of 100.

AUD/USD

The Australian dollar keeps falling within the descending corridor, but at the same time demonstrates a local upward bounce. The better than expected data on home loans have supported the currency. As reported by the national statistics bureau, in February the volume of loans decreased by 2.5% against the expected 3.6%. In addition, the total volume of the issued loans went down by 1.3%, which is less strong than in January when the drop made 2.3%. Technically, even the rise up to 1.035 won't break the descending corridor.