Bernanke presented optimistic view of Fed’s programs supposedly working (so far) and hoped for economic recovery settling down at the end of this year. Good performance of stocks is continuously spreading to other instruments as well. Industrial metals have been bullish for the last couple of weeks with copper hitting new highs and paving a path to a support of as high as 5165 USD per ton in comparison to 2765 USD at the end of December 2008. Major currency pairs are also moving in the direction in line with bullish stock markets, that is up for USDJPY, EURUSD and in effect of course EURJPY. While breaking a psychological level of 100,00 on USDJPY spelled a certain rise (to 101,40 so far and potentially to as high as 109,90-110,60) on that pair, EURUSD has still a support of 1,3735 to conquer in order to generate a stronger buying signal. Finally, a good sentiment means gains on emerging currencies as well. Why the Polish zloty so far did not manage to break through a strong support around 4,40 on the EURPLN, Mexican peso is the strongest since January the 9^th and South African rand hasn’t been stronger in more than five months. The whole matrix of recoveries relies to a significant extent on the US stock market, with its S&P500 potentially climbing up to 875-880 points. Should it retreat fiercely, all mentioned markets are sure to give up ground as well.

This week’s calendar is much lighter than last’s. Among the data, only US’s trade balance and Germany’s industrial orders and output may have some visible impact in global terms. On the other hand, we have 3 interest rates decisions in major countries, that is Japan, UK and Australia. The last two seem to be crucial as GBPUSD and AUDUSD (very bullish in last weeks) are very close to some significant support levels of 1,50 and 0,7267 respectively.

Przemysław Kwiecień Chief Economist