Currency Tech

EURUSD R 2: 1.2650 R 1: 1.2450 CURRENT: 1.2206 S 1: 1.2125 S 2: 1.2000

USDJPY R 2: 93.70 R 1: 92.80 CURRENT: 91.35 S 1: 89.00 S 2: 88.00

GBPUSD R 2: 1.4950 R 1: 1.4725 CURRENT: 1.4680 S 1: 1.4550 S 2: 1.4400

AUDUSD R 2: 0.8575 R 1: 0.8380 CURRENT: 0.8298 S 1: 0.8130 S 2: 0.8070

Market Brief

The USDJPY rose to 91.79 from 90.94 yesterday EURJPY rose to 112.50 while Japanese shares climbed, led by exporters after Prime Minister Hatoyama said he would step down less than two months before elections. The Nikkei rose 0.4% to 9,747.54, reversing from a decline of 1.1% while MSCI Asia Pacific Index was little changed. S&P 500 Index slid 1.7% as BP's failure to plug a leaking oil well in the Gulf of Mexico dragged down energy producers and on tensions in the Middle East. Australia's GDP rose 0.5% (prev. 1.1%) and 2.7% (exp. 2.4%) annualized as expected for a fifth straight quarter as government stimulus spending helped counter consumer demand that weakened after the aggressive interest-rate increases. AUDUSD rose to 0.8367 after today's report as investors bet the RBA may resume raising interest rates in the coming months after pausing yesterday for the first time in four meetings and said Australia's monetary policy setting is appropriate for the near term. RBA's Stevens predicts GDP growth will accelerate to 4% by the end of 2012, citing surging Asian demand for commodities and a jobs boom that has pushed down unemployment to around half that of the US and Europe. Government investment in infrastructure surged 11.6% in Q1 2010 and household spending slowed to 0.6% (prev. 0.9%).

The EURUSD traded at 1.2229 down 0.6% after it earlier fell 1.6% and touched 1.2111, the weakest since April 2006 as a tumble in US stocks and concern that efforts to cut budget deficits will hamper Europe's economic revival damped investor appetite for riskier assets. The EUR also fell as EU jobless rate increased to 10.1%, the highest rate since June 1998 and ECB said yesterday that Europe's banks will have to write off more loans this year than in 2009 and their ability to sell bonds may be curtailed by governments seeking to finance fiscal deficits. The EURUSD earlier recovered from a four-year low as a report showed US manufacturing grew for a 10th month in May, the highest in almost six years. The EURUSD's drop below 1.2134, 50% line between the all time high and low of 0.8230 in October 2000 and 1.6038 in July 2008, signals a further decline to 1.1640, according to technicals, which would be the lowest level since November 2005. The EURGBP 1.4% to 0.8348 after touching 0.8324, the weakest since December 2008 while GBPUSD strengthened 0.8% to 1.4651 after reports showed UK house prices had their biggest annual gain in more than 30 months and manufacturing held at the strongest level in more than 15 years.

The US ISM manufacturing index declined less than forecast to 59.7 (prev. 60.4, exp. 59). The report added to optimism manufacturing growth and consumer spending may be strong enough to help the US weather any effects from the European debt crisis. The BOC yesterday became the first G7 central bank to raise interest rates since July 2008 when Governor Mark Carney increased the target rate to 0.5% from a record-low 0.25%. The USDCAD rose 1% to 1.0554 after losing 0.2% earlier.