AUD: Long positions on the Aussie in the last month have been significantly reduced

After dipping to a new two-month minimum of 0.9567 yesterday, Aussie has recovered a bit at night and in early trading in London, returned to 0.96. However, in the attacks on the euro, the Australian currency moved back to 0.9570. Some time during the night Aussie was trading above 0.9650, which helped a favorable number of approved applications for building and export data. Decrease was due to well-known Chinese economist, who suggested that the stakes in his country should be raised further to 200 points. This observation was soon exerted a significant influence on Chinese and Asian shares, as a result, it placed pressure on the Australian currency. Partly recent weakness Aussie associated with fears that today's GDP data will be on the weak side with an average expectation of a decline of 0.4% compared with the previous quarter. Australian bulls continue to recede in the background to achieve currency new lows. The tendency to sell on growth was evident throughout this month, as confirmed by recent data from the CFTC, which suggest that long positions in Aussie have been significantly reduced.

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JPY: Yen aggressively growing at the end of the month, probably will continue to grow the rest of year

The yen rose strongly during the night trading, supported in part by the desire to trade without risk to the end of the month, as well as fear of imminent tightening measures, China in the near future. This is most obvious in the pair EUR / JPY, which dropped below 110 for the first time since mid-September. It also led to a moderate corrective activity in the pair USD / JPY, which went back to the level of the gap in 84.00. Today is the last trading day before December, probably, traders will continue to avoid risk to the end of the year and the seasonal trend to strengthen the yen will become a factor that will contribute to more stringent predictions of investors.

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GBP: The market offers the British authorities the presumption of innocence

The focus of the beginning of the week was directed to publish the report of the Office of the Budget on Monday. Management is of the view that the economy can move through and the impending fiscal tightening, although it has revised the growth for next year down from 2.4% to 2.1%. Although at the moment the market seems to offer the authorities the presumption of innocence, as we mentioned before, there is considerable uncertainty regarding the impact of fiscal policy and rate of monetary policy. These factors increase the volatility of the pound and are likely to continue to act in the same manner at the beginning of next year. However, while the pound is sandwiched between a good habit to the dollar (the level of 1.55 with respect to the cable) and the continued downward pressure on the euro, which came to a level at 0.84 on Tuesday, which is a ten week minimum. Night data on consumer confidence showed a moderate decline within the past six months, because there is no reason for concern.

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EUR: Even the most far-fetched rumors caused an immediate reaction in the euro

Continuous pressure on the euro last few days continued today in the morning, and at the moment, the single currency is not so far from the level at 1.30. Just four weeks ago, the euro traded above 1.40. Spreads da bonds of PIGS (Portugal, Italy, Greece and Spain) newly expanded significantly this morning. For example, the yield of Italian desyatiletok up 15 points, reaching 4.76%, the spread between the Bund was 210 points, while the yield spread against the Spanish ten-year paper yield German Bunds has reached nearly 300 points. Market sentiment towards the euro is so fragile that even the most far-fetched rumors caused an immediate reaction. This morning came the suggestion that S & P may downgrade the credit ratings of France. In November, the euro lost 6.6% against the dollar, compared with a 4.4% decline against the yen, 3.3% against the pound and 2.6% against the Australian dollar. All negativity that surrounds the euro at the moment, said that the position of the euro against other major currencies should be much worse. But this is not the case when the costs are watching closely.

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EU leaders back to the drawing board

If European leaders hoped that the dual listing plan of salvation of Ireland for 85 billion euros and the new European Mechanism for Stability calm nervous markets, they need to think again, judging by yesterday's enthusiastic reaction. EUR, which jumped to 1.3350 in early Asian trading after the announcement a day earlier, fell to 1.31 by the middle of the day, before the new two-month minimum. European debt markets were once again in a fright, providing a hard time for Spain, Portugal, Italy and Belgium. Yield of long-term government bonds to the Bund in the four markets at some point raised by another 20 basis points.
This is not surprising. The reason for the last debt crisis was never just a guess Merkel that bondholders should share the burden with taxpayers. This is a combination of many factors, including the following:

A) Many European banks have become more dependent on funding the ECB (and have completed an acceptable security);
B) wholesale (interbank) lending for these banks is almost entirely absent;
B) holders of retail deposits are deeply concerned profitability of their investments, despite the government guarantees safety of deposits;
D) holders of bonds, no matter large or small, are concerned at the loss;
H) Governments have provided guarantees on deposits at a time when mass raises the question of the amount of debt governments themselves and their fiscal deficits;
E) assets on the balance sheets of these banks under severe pressure, and
M), the German government under pressure from taxpayers who do not want to participate in future rescue of European countries.

Late last week, the IMF strongly pressed the Irish government to ensure that large bondholders accepted the restructuring. This was opposed by European leaders, who feared the further spread of fears for the fragile debt markets. Smaller bond holders in the Anglo Irish already were required to adopt a "haircut" 80%, although some of them feel humiliated, because large holders of bonds do not have such conditions. In the case of Ireland the opportunity for major bondholders to take losses in the three major Irish banks is limited because only a third of the bonds of these banks have government guarantees, or not protected. From our point of view, the bond holders in Ireland, as in Portugal, Spain, Greece and perhaps even in Italy, will be forced to participate in debt restructuring. Ajay Chopra, a leading man in the negotiations of the IMF in Dublin, it seems, continues to believe that the big bond holders are likely to contribute to Ireland. We think as well.
Speaking in general, the longer it will take European governments to accept the inevitability of "haircuts" for bondholders, the more confidence falls to European leaders and causing more damage to the single currency from the perspective of its use for reserves. To preserve their dignity, Europe can not long evade the issue. Taxpayers are unlikely to take long steps of salvation, if the burden of rescue will not be shared with investors.

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AUD: Aussie under pressure, as the RBA's monetary policy considers acceptable

Volatile night for the Australian originally arose because of the pressure of sales after the South Korean president has promised that North Korea will "pay" for their aggression. After falling below 0.96 Australian rebounded slightly, but still looks vulnerable. In recent weeks, he came to the extremely low levels, thereby confirming that the appetite for risk has gone on the decline by the end of the year. At Aussie also influenced the President's proposal RBA Stevens, that monetary policy is likely to be acceptable now. Night came the news that corporate profits went down in the last quarter. On the background of consolidating the dollar, the Australian collided with the oncoming wind.

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JPY: Korea and Europe retard attention to themselves from the yen

On the background of attention to Europe and the Korean Peninsula, the forex market continues to ignore the yen. In anticipation of the end of the year and against a background of relatively low corporate demand, liquidity, USD / JPY remains insignificant. Institutional interest in the yen is also limited. As a result, the pair USD / JPY continues to trade in a narrow corridor. During the night she turned in 40 points in the range of about 84. Traders are still inclined to cover dollar short positions.

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