EUR/usd
Forex's reaction to Bernanke's commentary was the strongest, yet the market was the first to come to senses after the violent movement. Yesterday since the end of the US trading session and all through the Asian one the dollar index was retracing. Friday is expected to be quiet as no important news is scheduled for today. Among yesterday's releases the German Flash Manufacturing PMI, which reflected the continuing weakening, deserves attention. Now the euro zone and Germany, a former locomotive, show roughly the same performance. Though, Germany's Services PMI proved to exceed expectations, returning to the growth zone after two months of decline. The EU Consumer Confidence is also in the uptrend, which is reassuring. Yesterday's publication marked growth to -18.8, which is the highest level since August 2011. The US statistics also didn't give cause to doubt the economic recovery. Existing Home Sales grew above 5bln. The annual rate made 5.18bln and this is a return to the levels recorded 6 years ago. The price growth to the pre-crisis levels is also worth noting. It's good that the economy's main troubled sector, from where the world financial crisis began, has returned to the hot levels. The only disappointing thing is that employment is much below those levels and companies don't hurry to hire specialists, focusing on increasing of labour productivity. Thus, we get a recovery with a warp towards the asset markets, real and stock.
GBP/USD
The pound also enjoys favourable news releases, yet traders prefer not to pay much attention to them as they won't change the monetary policy much. Retail Sales statistics proved to be surprisingly strong. With Auto Fuel considered, growth totaled 2.1% m/m and 1.9% y/y, significantly exceeding the forecasted rates. This helped the sterling feel better than the euro all through the day, but still was not enough to recoup all the losses against the euro, incurred a day before.
EUR/CHF
Yesterday the SNB held a quarterly meeting, which, as expected, brought no change to the rate and a peg to the euro. Anyway, it became a reason for purchases of the franc. EURCHF was falling all through the day and reached the lows reported a week ago. But if those lows could be accounted for by the general demand for safety, yesterday's purchases of the franc were going along with selling of the yen, which is not typical of the periods of risk-aversion. In our opinion, Switzerland is lucky to be that small not to attract attention by its bold policy of pegging to the euro. No matter how you look at it, inflation in the country remains low, while employment is rather high and the economy is growing at a healthy pace and the same growth is expected in the future ( the forecast is 1.5% for 2013). It doesn't necessarily mean that the franc will continue growing. Quite the opposite, such low levels give a good reason to purchase the pair at a lower price.
USD/CAD
usdcad has good potential to decline. It is now in the area of cyclic highs, from where it has reversed for growth over the last two years. Combined with our expectations that oil and gold will hit a support in the coming week or two, selling of the pair at the extremums looks risky, but with the potential of a handsome profit.
