21/05/2012 Just a correction, nothing more
The markets cannot move in one and the same direction for long, even if there are reasons for that. Thus, Friday became the day of correction, when demand for risky assets was growing and the euro was appreciating since the start of European trading. Moreover, the single currency also managed to extend its modest gains during the Asian session. Earlier today EUR/USD successfully recovered from Fridayís lows of 1.2640 to 1.2810. Itís quite possible that being under high pressure since the beginning of the month the euro will try to close out this trading day positive as well. This run of events can be well contributed by the fact that concerns around Greece are currently subsiding as the G8 leaders have expressed their will and desire to keep Greece in the euro bloc, emphasizing the need for economic recovery incentives (the Anglo-Saxon approach), but at the same time keeping in force the demand for the balanced austerity (the German approach). Although this formal support doesnít promise to ease Greeceís lot, it still can make the markets which for the last two weeks considered the question with Greeceís exit settled feel more optimistic. Itís not surprising that the leaders of the largest developed countries should pay such a careful attention to this rather small country. Roughly half of the EU countries are in recession judging by the data for 1Q. Despite quite favourable figures posted in the first quarter the recovery in the USA is evidently losing steam and experts suppose that by the end of the year the Fed will probably have to adopt some new non-standard policies to maintain low interest rates in the economy. There wonít be much statistics and therefore any obstacles to the correction today. The only thing of interest is the Construction Output release scheduled for today. This indicator remains in the down trend, and even lost at once 7.1% in February. The year-to-year reduction then made 12.9% and the overall loss from the peak levels in 2007 amounted to more than a quarter. As we see, in contrast to the USA, which have demonstrated no decline in the sector and even posted some gains there, the European affairs are far from being stabilized. So, we can hardly rely on a quick reversal here.
The British pound finished the free fall of the previous week with the consolidation around the 200-day moving average level. The consolidation is now at 1.5820 after testing the low of 1.5730 on Monday morning...Read full review