EUR/usd
The Ifo Business Climate Index dropped in October more than expected. The general index fell from 104.7 to 103.2, while only 104.6 had been expected. The Ifo Current Assessment and expectations again declined simultaneously, to 108.4 and 98.3 from 110.5 and 99.3 respectively. The current rates are the lowest since the end of 2012. Investors tend to believe that in the second half of the year Germany will fall into technical recession, i.e. will suffer reduction of the GDP for at least two quarters in a row. Yet, it should be taken into account that the country has the strong beginning of the year in store. Besides, the depreciating euro along with the reduction of energy and commodity prices will enable to widen trade surplus, supporting the export sectors. The main thing here is to find enough buyers for the German goods. You see, China, which has consumed a considerable part of machine tools and equipment, is growing slower and slower, moreover, the Chinese now prefer to provide the country with their own equipment. In the short term, against weakness of Germany's business climate yesterday's steadiness of the single currency looks really remarkable. The pair has been trending up for three consecutive trading sessions, judging by the daily lows. Investors are now less sure that fomc's statement after the meeting on Wednesday will be hawkish, in comparison with what they thought a couple of weeks ago. Well, let's wait and see. We also shouldn't forget about inflation statistics for the eurozone on Friday and for Germany on Thursday. So, the second half of the week can be more eventful, don't pay attention to the sham lull yesterday and today.
GBP/USD
The dollar's retreat before the important decision to end QE enables the British currency to feel more confident above 1.61. While there's no important news from Britain, the pair will be mainly affected by the US statistics. Among them Durable Goods Orders are noteworthy – they can show some recovery after the drop in August. Also, data on the Consumer Confidence can also arouse surprise if they deviate much from the expected 87.4.
USD/JPY
The pair slightly shifted down yesterday, again because of depreciation of the US currency. The pair was consolidating around 107.50 and now has slightly reversed up, trading at 107.80. It seems that only the BOJ's efforts to stimulate the economy can now help the pair with growth. These measures can also support money inflow into Japan's stock indices, where a share of short positions is close to the record highs, which can be a signal of a reversal in the near future.
AUD/USD
We keep watching the aussie's attempts to form a bottom and on its basis go into an uptrend. Until now no positive results regarding this are observed, though the pair is already above 0.8800, which is a good bullish signal. To be sure that the break has really happened, it would be better to wait for consolidation above 0.8850. More cautious traders shouldn't enter the market before the release of FOMC's decision.
