EUR/usd
The stock markets didn't stop at the highs they hit a day ago and, as expected, rushed to their historic highs. The Dow Jones index managed to grow by those very 40pips which separated it from that target. Formally, it is explained by China's intention to pursue its objectives regarding the economic growth, which promises demand for commodities and a better business sentiment around the world. The former correlations again revived against this background. It means that growth of the stock markets gives rise to the rally in the commodity markets, contributes to decrease in the yield of Treasuries, but also puts pressure on the dollar index. All that was in favour of the single currency. eurusd managed to grow during the day, though there were serious attempts to suppress that growth in the very beginning. As a result, the euro retreated a safe distance away from 1.30 and is now trading at 1,3050. It's worth mentioning that there the euro has nothing to do with this retracement. The only thing that caused the growth was weakness of the dollar. Sufferings of the EU banking sector still affect capital flows into the euro and uncertainty around the political situation in Italy keeps investors' pockets closed for investments into the troubled region. There were a lot of non-manufacturing statistics released yesterday (it's 70-80% of the economy). The data on Europe, albeit indicated the upward revision of the PMI, still confirmed contraction of the general activity (the index is below 50, at 47.9). A bit later we learnt about the results of the ISM's (a pioneer in the investigation of this index) research for the USA. This index grew to 56 after 55.2. Please note that in Europe the Non-Manufacturing PMI has been on the decline for the last 13 months. So, we can't be all optimistic about Europe. Quite likely, strength of the euro/dollar in the coming weeks will be maintained by weakness of the dollar on the further incentives from the Fed and simultaneous contraction of the ECB's balance sheets.
GBP/USD
The sterling finally received some good news. Yesterday's Services PMI proved to be unexpectedly strong, showing growth to 51.8 after 51.5 in January. It made the cable's retracement yesterday even stronger. gbpusd was flirting with 1.52, i.e. it fully recovered after Friday's sale. Probably, we are in too much of a hurry, but we think that it was a correctional bounce and the future of the pound is in the hands of Mervyn King who speaks today and the BOE's decision on the asset purchase programme, which will be published tomorrow. Beware of the swift return to 1.50.
AUD/USD
The aussie is a good currency. Even the stream of bad news for it is shorter than with other currencies. For instance, this time the end of selling in the Australian currency is connected with better than expected retail sales in January, China's intention to stimulate growth of its economy (which will lead to increase in the demand for the Australian resources), but also with rather favourable economic indicators in 4Q. The annual growth rate made 3.1% in that period, which has been a real dream for any developed economy in the recent years. If you think that the growth will continue, buying of the Aussie still looks attractive, even at 1.0280.
USD/CAD
Canada will also have a busy day today. Tonight we'll learn the interest rate decision. Investors and traders will scrutinize the BOC's commentary searching for hawkish notes in it. The country hasn't been in the best shape lately, but the original cause of it consists in the decrease of the US demand for the Canadian energy. The domestic situation with inflation and exports spoils the positive picture drawn by the labour market.
