EUR/usd

The scenario we described earlier is coming true. Instead of following the risk on/off principle, the currency market is moving on the difference of economic and monetary policy forecasts. The first scenario, which dominated before the crisis and the first years after it, presupposes weakening of USD against the background of stronger global economic growth. Very often the US statistics serve as the main sign of such strengthening and the major driver. Now the situation is a bit different. Strengthening of the labour market, growth of stock indices and multiyear highs of Consumer Confidence Index don't let you automatically consider the situation to be favourable for the whole world.  More so, they on the contrary emphasize the difference of the US, EU and Japan. Yesterday's US statistics once again confirmed these differences.  The Home Price Index for the country's 20 major cities by S&P has gone as high as 10.9% y/y, which hasn't been seen since the boom in the real estate sector in spring 2006. An hour later the market eagerly rushed to purchase the US assets and dollar on the message about growth of consumer confidence up to the five-year high in May. The Conference Board indicator grew to 76.2 against the expected 70.7. Of course, the positive shifts in the stock and real estate markets made their contribution in this. Besides, growth is usually spurred by improvement in employment, but here the progress is smoother, so it wouldn't have caused such a sharp increase in the index. Upon the whole, the US affairs are getting better and this is a good reason to purchase the US dollar as it threatens pullback in the stimulus by the Fed already before the end of the year. Yet we do not expect it before autumn. eurusd plunged to 1.2840 last night, getting farther and farther from its 200-day MA. 

GBP/USD

The British pound also suffered from the bullish sentiment in the dollar, gbpusd hit a fresh 2 ⅟2 – month low. 1.50 is still attractive for buyers, but behind this support there's no fundamental grounds. The MPC doves do not hurry to change their point of view, so while the USA  is considering the stimulus pullback, Britain is thinking about providing fresh incentives in the coming months. Should the support be at 1.50, the next target of bears may be seen at 1.4839 (the low of March). 

USD/CAD

The canadian dollar is steadily sold. There haven't been any significant changes since our last review. The series of ascending highs brought the pair to test 1.04 last night. In the short term the rate may slightly go down, but it's better to be cautious here as today we will hear the BOC's commentary on the monetary policy (you shouldn't expect the rate cut).

AUD/USD

The Australian dollar failed to get support at 0.96 and fell down to 0.9530, which is the lowest level since October 2011. Now the bears are aiming at 0.9380, which is the low of 2011. The decrease of activity in the extractive industries upsets aussie-traders a lot.