EUR/usd
On the news that the US markets would be closed on Tuesday, the US stock futures went down. One day is something that you can put up with, however closing of the exchanges for two days in a row because of the natural disaster hasn't been seen for more than 100 years. In theory, if the American dollar is the funding currency for other assets, the demand for capital from the States should cause strengthening of the dollar, as the companies will be repatriating their funds and the government – increasing borrowings to restore the infrastructure. However, it is a long-term process, so it will be hard to distinguish it from a great many other factors, probably working in the opposite direction. The absence of US traders is reflected in the slack trading across Forex. Yesterday eurusd was gradually falling all through the day, but hit neither new highs nor lows. The great disappointment for the American players is that they cannot react even to their domestic news. Yesterday there was a release of the US spending/income data. The report confirmed the picture drawn by the retail sales stats: Americans spend really much – the spending growth rate has been above the income growth rate already for three months. Among today's EU news the employment statistics for Germany are of interest. Actually, they haven't proved to be very encouraging – the number of the unemployed has grown by 20K in October. Another frustrating fact is that the tendency towards unemployment growth has been gaining pace lately. It looks as if the southern countries hauled the locomotive. Anyway, the euro remains in demand, since all attention is focused on the negotiations of Greece with the Troika and on whether Spain will ask for a bailout or not.
EUR/GBP
Last week was marked with growth of the British pound. It was clearly seen in the pair with the euro, which fell from 0.8160 down to 0.80. The drop was caused by the positive GDP figures and King's comments, which made it clear that QE extension wouldn't necessarily take place in November (next week). This week we see cautious purchases of the euro for the pound, since other members of the Bank work to restrain the ardour after the positive statistics. Yesterday's data on lending in the country must have contributed to getting around to reality. The current Funding for Lending scheme hasn't generated any abnormal surge in the number of issued mortgages.
USD/JPY
If we try to predict what is on the minds of the Japanese politicians, in the majority of cases it will be correct to expect either no actions from them or very few formal steps, which would shift the responsibility onto another branch of the government. These days we've frequently mentioned that usdjpy is growing on the expectations of large-scale actions from the BOJ and that after the publication it will go down. Actually, the BOJ has extended the asset purchase programme by ¥11trln (yesterday we spoke about ¥10trln). However, there is one more step which is still to be estimated. Besides increase in asset purchases the Bank promises to provide an unlimited volume of assets at a low interest rate to financial institutions which will lend out these assets. The question is what exactly will urge the Japanese and their corporations to make loans if for 20 years before that they acted in an absolutely different way.
gold
Gold has found the bottom or is consolidating before the further decline. The metal has been steadily quoted at $1710 per oz for five trading days. However, the fact that it happened after the drop from 1790 makes it possible that after the consolidation and maybe after a slight retracement we'll see the further decline, as it was in March. Against this idea is the fact that in March it all started with a sharp decline and now we've seen gradual sales.
