EUR/usd

The new trading week has started very quietly. Besides, despite the negative beginning of Friday, as of the end of the week the indices and currencies generally remained where they had been. The pressure the euro suffered on Friday was stopped by a stream of purchases, which drove the pair up to the daily highs at 1.2315. Now the pair is trading at 1.2270, though in the morning hours we could still notice that pressure on the euro was increasing. On the whole, this day is going to be calm with very few data coming out. The only events deserving attention are government debt auctions. In the second half of the European session we'll see the results of French bond auctions and a bit later American short-term bill auctions will take place. The FT published a solid article highlighting the benefits that exporters get from the cheap euro. However, as we mentioned last week, the actual situation is not very optimistic. The business decline caused by tougher lending conditions and lower government spending in the region has a more weighty effect than the cheap euro. The factory orders of Germany, the locomotive of the European growth, have shrunk by almost 8% annually, the industrial production is (for now) showing a zero growth against the level of the previous year, but has been on the decline for the last couple of months. The periphery suffers even a worse state of affairs – there not only orders, but also the actual production have been declining for many months in a row and the decrease of the GDP is just gaining momentum. By the way, tomorrow we'll see the first estimate of the European GDP in the second quarter. It is expected that Germany will show a slight growth (0.1%) and Europe will demonstrate a little decrease (-0.2%). However, the situation may prove to be worse because of the weak countries. Notwithstanding this fact the markets prefer to trade sideways at the moment. It is a common case at this time of the year. Only by the end of August (when the holiday season will be over) we may see some stronger volatility in the markets. Now we have formal reasons to wait for the end of the month, as at the beginning of September the legitimacy of direct bond purchases by the bailout fund will be scrutinized. The ECB promised to do everything that is in its power in that case. Before that it is very likely that we will see some bounce in the euro. It's hardly possible that there will be any significant reversal, even if politicians will do everything in a proper way. Already now it is clearly seen how dear the continuous uncertainty of the euro's future has cost to the economy.

GBP/USD

The daily candles of the pound form a clear-cut upward curve. However, the main battle for the resistance line is still ahead. For the time being the bears are loosening their grip, allowing for the higher daily lows. However, GBP/USD has been below the 200-day moving average for more than 3 months and still remains there, despite the general talks about a rather good performance of the British currency. Looking at the situation from a broader perspective, we can say that these are just moves within the permitted limits. Main players, who are able to reverse the situation, will join only after the 200-day MA will be broken.

USD/JPY

The Japanese yen performs in a way very similar to the British currency. The pair is fluctuating strictly within the boundaries of the flat, where bears though allow for a sequence of higher daily lows, don't give up the key levels. Anyway, the 78.70 level wasn't passed on Thursday. On Friday the bearish pressure became stronger and now trading is held at 78.25, which is 25 pips above the low of the range. Today's data on the GDP in the second quarter have proved to be disappointing. The economy has grown by 0.3% (with the annualized rate of 1.4%). A miracle hasn't happened.

AUD/USD

The aussie, on its part, has also tried to put a quart into a pint pot, fighting the market powers. On Friday's purchases AUD/USD jumped up to 1.0570, but already today we see that sell-offs prevail again. Unlike many of its rivals, the Aussie was trading flat only for one last week. As we've already mentioned, it is very likely that after a strong growth there will be another fall. Probably, it will happen this week, as AUD/USD will fluctuate mainly on the news from the outside (there isn't much domestic statistics) and, as you know, it is very easy to find something negative in the news from other regions.