Currency Tech

EURUSD R 2: 1.3340 R 1: 1.3280 CURRENT: 1.3216 S 1: 1.3090 S 2: 1.3000

USDJPY R 2: 95.00 R 1: 94.80 CURRENT: 93.93 S 1: 92.85 S 2: 92.50

GBPUSD R 2: 1.5400 R 1: 1.5320 CURRENT: 1.5245 S 1: 1.5130 S 2: 1.5000

AUDUSD R 2: 0.9390 R 1: 0.9300 CURRENT: 0.9236 S 1: 0.9150 S 2: 0.9050

Market Brief

USDKRW fell 0.7% to 1,115.45 for the first time in three days, leading other Asian currencies lower after China raised bank reserve ratios for a third time this year, fuelling concern the nation's central bank will try to limit the currency's gains, after it climbed 4.4% this year. China's monetary tightening yesterday will absorb 300 billion Yuan ($44 billion) from the financial system and may push back an interest-rate increase until early June. China's third increase of bank reserve ratios this year left benchmark interest rates and the Yuan's peg to the USD unchanged, risking the need for more concerted effort to contain property prices and inflation in coming months. The current level is 16.5% for the biggest banks and 14.5% for smaller ones. A $22.5 billion jump in foreign-exchange reserves, the biggest gain in four months, suggested investors could be showing a renewed appetite for bets on the currency. Exports and company profits are rebounding and the economy expanded 11.9% in Q1. Reserve-ratio increases and the targeting of a 22% reduction in new loans this year are among efforts to wind back stimulus that has driven the nation's recovery from the financial crisis with measures to cool the real-estate market have included a ban on loans for third-home purchases and raising mortgage rates and down-payment requirements for second-home purchases. South Korea's inflation rose 2.6% (prev. 2.3%, exp. 2.4%) and exports advanced for a sixth consecutive month in April, boosting the case for the central bank to raise interest rates. GDP expanded a faster-than-expected 1.8% last quarter and Credit Suisse last week raised its 2010 growth forecast to 6.2% from 5.2%. Japanese financial markets were shut for a holiday.Australian house prices rose 4.8% in Q1 (prev. 5.2%) the most since at least 2003, increasing the likelihood of the RBA boosting borrowing costs tomorrow. Surging property prices are a key reason that Governor Glenn Stevens to raise the RBA's lending rate tomorrow to 4.5%, the sixth increase in seven meetings. Manufacturing expanded 9.3 points from March to 59.8 in April at the fastest pace in almost eight years and consumer prices advanced 2.9% (prev. 2.5%) to near the RBA's target range. The AUDUSD traded at 0.9240 while AUDJPY gained 0.3% to 87.01 after the report was released. The RBA aims to keep inflation between 2% and 3% on average. Home Approvals probably rose 0.8% in March, according to the report due on May 5. AUDNZD fell to 1.2706 after falling to 1.2649, the weakest since Feb. 11 near a three-month low on concern about the impact of plans to raise taxes on mining companies and China's decision to increase bank reserve ratios. Unlike counterparts in Europe and the US, Stevens is among Asia-Pacific policy makers withdrawing monetary stimulus this year. Malaysia and India have boosted borrowing costs, while the RBNZ said last week it expects to begin raising rates in coming months. Higher interest rates are attracting funds to Australia, which has seen AUDUSD rise 27% in the past year.

The EURUSD fell from a one-week high to 1.3223 while EURJPY declined to 124.14 on concern a 110 billion-EUR ($146 billion) bailout package for Greece will fail to contain the region's sovereign-debt crisis and on speculation the EU will struggle to win agreement from its members on the aid plan for Greece when EU leaders meet on May 7 to discuss the timeline of parliamentary approval for loans to Greece, and as Germany plans to debate the plan on the same day. Greece's three-year financial lifeline requires the nation to cut its budget deficit below the EU's limit of 3% of GDP by the end of 2014, a year later than originally planned as the shortfall was 13.6% last year, the region's second-biggest after Ireland.