EUR/usd
Sometimes in films the most dramatic episodes are shown in slow motion so that we feel all the peripeties and depth of the moment. This time it was the same – sticking to its cinematic principles, the States is inching its way into the catastrophe, showing in detail how characters are trying to save themselves as well as the whole world. Yet, in this case events are real, so a happy end cannot be guaranteed. Besides, after the successful rescue in the dying seconds (many quite reasonably believe that politicians will have come to an agreement right by the deadline) life should go on. And it means life with the shattered faith into continuation of reforms, with another evidence of the USA's inability to effectively control government spending despite 4 years of economic growth, with debt markets shivering at any hint at the stimulus rollback, with the housing market where mortgage rates become twice as high for just a couple of months and sales volume decreases sharply against the background of growing interest rates. If the rates are the reason, selling is the reaction to it. The same with the labour market, which fails to reach the appropriate growth rates due to constant uncertainty about the future and attempts to increase labour efficiency instead of the pace. Real consequences? Cuts in government spending may further shake the confidence of corporations and households. Market participants are gradually turning away from the dollar, trying not to show signs of escape. At least it cannot be said by the rates of eurusd and we also don't have complete and accurate information on the trade volume which stood behind that peace and calm. We just see USD depreciating against other majors, including the euro – by 60 pips over a week to 1.3570. Yet, here it's worth mentioning that altogether it's made 280 pips over four weeks.
GBP/USD
Apparently, the sterling is not among the majors which now serve as safe havens from the troubles with the dollar. We can see full-scale profit-taking in the British currency now. On Friday the pound suffered the heaviest selling since July. Yet, then it was one of the last attempts of bears to break the market and gather stops and on Friday we observed the large-scale profit-squeeze following the impressive rally. Having hit the high of 1.6260 on October 1 and fallen down to 1.6000 on Friday, the pound still has some space to decline. Correction closer to 1.5915 would look quite logical.
USD/JPY
The yen is again a safe haven. usdjpy is moving away from 100, having lost about 2% over the last week, if we count from the weekly high. All in all, the total losses for the last four weeks have made 3.5%. If it goes on like that, the Japanese currency will cease to be an export locomotive, which will hardly be favoured by the officials as imports still exceed exports.
EUR/CHF
With certain hesitations but at the same time having a clear-cut trend, the pair was growing all through the last week. From 1.2200 at its beginning the franc slipped down to 1.2300 by the end of Friday's trading. Now we can observe a kind of profit taking. However, the pressure upon the franc, in our opinion, will keep supporting the euro in the near term.
