EURUSD R 2: 1.2600 R 1: 1.2450 CURRENT: 1.2275 S 1: 1.2175 S 2: 1.2000
USDJPY R 2: 95.00 R 1: 93.70 CURRENT: 91.26 S 1: 90.00 S 2: 88.00
GBPUSD R 2: 1.5050 R 1: 1.4900 CURRENT: 1.4706 S 1: 1.4650 S 2: 1.4500
AUDUSD R 2: 0.8880 R 1: 0.8700 CURRENT: 0.8600 S 1: 0.8550 S 2: 0.8350
The JPY strengthened against all 16 major counterparts on prospects losses in Asian stocks will prompt investors to reduce holdings of higher-yielding assets. The EURJPY declined for a second day on concern Europe's debt crisis will impair an economic recovery of the EU, boosting demand for JPY as a refuge. Asian stocks dropped for the first time in six days and metals fell after US housing starts declined 10%, the biggest decline since March 2009. Nikkei 225 declined 0.4%, the biggest drop in the Asia-Pacific region, Kospi gained 0.1% and S&P/ASX 200 Index lost 0.3%. EURJPY declined to 112.14, USDJPY fell to 91.33, USDKRW gained 0.6% to 1,218.40 and USDMYR climbed 0.3% to 3.2680 on concern Europe's debt crisis will bolster demand for USD.AUDJPY slid 0.5% to 78.62 and NZDJPY declined 0.3% to 63.62 as the MSCI Asia Pacific Index fell 0.2% to 115.55 after five consecutive gains while the AUDUSD weakened 0.5% to 0.8599 and NZDUSD dropped 0.2% to 0.6963 for a second day as futures signaled US stocks will decline, reducing demand for higher-yielding assets. The currencies also fell as prices slid for commodities including crude oil and copper, sapping investor appetite as raw materials account for more than half of Australia's and New Zealand's exports. A fall in equity markets may ruin the risk appetite seen over the past few days and investors would be eager to buy dips for further gains provided key support levels in the S&P 500 hold. Declines in the kiwi were limited on an 80% chance the RBNZ will increase its interest rate for a second-straight meeting in July, according to market analysts, restarting carry trade.
The EUR fell versus 10 of its major peers after Spain's central bank said yesterday it plans to publish the results of stress tests carried out on the nation's lenders to counter speculation it needs international aid. World Bank President Zoellick said yesterday there are challenges ahead in Europe even if the rescue packages put together by authorities have bought time as EU leaders will meet today in Brussels to discuss the region's economies and the stability and growth pact. The EURUSD traded at 1.2279.
BOE Governor Mervyn King said officials will probably raise interest rates before selling bonds when they decide to remove stimulus in the economy adding that the MPC will not hesitate to begin to withdraw the stimulus when it is necessary. It is most likely to be through a rise in bank rate with asset sales over a period of time. While UK inflation still exceeds the 3% upper limit, BOE predicts the rate will decline in the aftermath of the economic slump. The BOE kept its 200 billion GBP bond stimulus in place to aid the economy as finance minister Osborne prepares the deepest spending cuts in a generation. In his emergency budget on June 22, Osborne will outline the scale of the spending cuts required to eliminate a deficit of 11.1% of GDP. Signs of inflation persisting are also lacking, including low measures of growth in money supply, earnings and spending with unemployment rate close to 8%.