EUR/usd
Yesterday the players stirred the market just a little, leading EURUSD beyond the ranges of Friday. In the low-volume market the pair still rose to 1.3829, but then came under pressure and went down to 1.3790. Apparently, the market players aimed at hitting the stop-order levels, thus causing intense volatility with low volumes. However, in general the market remained within the range and now trading has stabilized at 1.3800. This day doesn't promise to be volatile either as the only important release scheduled for today is that on Existing Home Sales in the USA. It is expected that the latter will continue correcting since the housing market is losing momentum. This slowdown is caused by raising of the interest rates, which occurred against increasing yields of debt securities and growing expectations of the policy toughening. Because of that those who were refinancing the current mortgages or preferred to improve their living conditions benefiting from the favourable circumstances, now express less demand. Of course, with a respite that there was such an opportunity, that is on condition there was confidence about the source of income. In the recent years the interest rates have been the lowest on record, at the same time it's been obvious that it can't last forever. Thus, the US housing market is gradually passing over to the stage where it will rely on the strength of growth rather than favourable supply conditions. This shift is impossible without some drops. Besides, after the crisis of the substandard lending the banks will have to be cautious, so the indicator will hardly reach the former highs (about 6.5bln of sales yearly) in the foreseeable future. Judging by the short-term reaction, the rates above the expected 4.57bln can be treated positively by the markets and cause USD purchasing. In the meantime, a sharper decrease from 4.60bln is able to undermine confidence in the depth of the recovery. The housing market is very indicative regarding this as it sheds light not only on the macroeconomic rates, but also on the willing of consumers to make expensive purchases. Before that they (or credit experts in a bank) carefully weigh the ability to cover such expenditures in the future.
GBP/USD
The sterling feels a bit better than the euro, getting support from the stock markets. While the euro surrendered the level of 1.3800 to the dollar, the pound managed to catch hold of 1.68 (for now). The sterling is running little risk today due to absence of news, however tomorrow may prove to be a more stirring day for the pound-traders. The minutes of the MPC's meeting in April will be published. It will be interesting to learn the rhetoric of the committee members on the eve of the unemployment decline to its threshold rate of 7%, though formally the bank refused to employ this guideline. There is a feeling that the MPC members are aiming to put pressure on the sterling and disperse expectations of the rate increase in the near future. And this idea will be put to a serious test tomorrow.
USD/JPY
The positive performance of the stock exchanges helps the pair grow. As we mentioned last week, if there are no geopolitical risks and unexpected flight to safe assets, the pair will be inclined to go up due to the continuing easing by the BOJ in contrast to a more hawkish tone of the US, Australian and New Zealand CBs.
AUD/USD
The aussie feels like putting an end to the consolidation near 0.9320 and makes attempts to go higher, to 0.9365. Probably, the bulls, with reference to the fact that the Australian growth is getting close to the trend rates, are aiming to take the pair above 0.9400 again. It is quite possible, however further growth, to 0.9500, may be no easy matter.
