Currency Tech

EURUSD R 2: 1.2970 R 1: 1.2800 CURRENT: 1.2627 S 1: 1.2522 S 2: 1.2450

USDJPY R 2: 95.00 R 1: 93.70 CURRENT: 92.66 S 1: 92.25 S 2: 91.57

GBPUSD R 2: 1.5130 R 1: 1.5030 CURRENT: 1.4869 S 1: 1.4720 S 2: 1.4650

AUDUSD R 2: 0.9200 R 1: 0.9050 CURRENT: 0.8920 S 1: 0.8800 S 2: 0.8710

Market Brief

USDKRW declined 0.3% to 1,138.60 after North Korea was reported to have made headway in its quest to become a nuclear power. The Bank of Korea (BOK) kept its benchmark interest rate unchanged at 2% for a 15th month as Europe's debt crisis adds to concern that the nation's recovery isn't yet strong enough to withstand higher borrowing costs. BOK Governor Kim is facing pressure to join India & China in withdrawing monetary stimulus as South Korea grows faster than expected on surging exports and stronger consumer spending with the GDP growing at 1.8% and unemployment rate falling to 3.7%. The recovery will likely lose steam in coming months as the global economy slows amid the European debt crisis according to analysts. China may relax the Yuan's peg to USD this month to head off criticism of its currency policy during May 24-25 talks with the US and help tame inflation, according to Royal Bank of Canada. AUDUSD weakened to 0.8923 while NZDUSD slid to 0.7146 for a second day on concern Europe will struggle to contain its sovereign debt crisis and as Chinese stocks dropped, sapping demand for higher-yielding assets.The EURUSD declined to 1.2620 and EURJPY weakened to 117.03 for a second day amid concern the region's most- indebted nations will struggle to contain their deficits, slowing Europe's economic recovery. The EUR weakened versus most of its counterparts before a German report that may show the GDP stalled for a second quarter. The GBPUSD dropped 0.5% to 1.4875 for the first time in three days and the EURGBP strengthened to 0.8488 on concern the UK's new coalition government will struggle to agree on policies to cut the nation's record budget deficit. GBP weakened against all counterparts on speculation Conservative leader David Cameron and Liberal Democrats leader Nick Clegg will fail to fulfill pledges made to cut government debt that S&P says will rise to 77% of GDP this year and 100% by 2014. The leaders of the coalition will propose 6 billion GBP of cuts within 50 days to reduce the budget deficit, raise the threshold to pay income tax, study a split between retail and investment banking and increase the BOE's oversight of the financial industry. The jobless claims probably fell 20,000 in April after a 32,900 decrease in March while the unemployment rate will remain unchanged at 8% according to a report due today.

Focus will be on the release of EU Q1 GDP where analysts are forecasting modest 0.1% QoQ, 0.5% YoY expansion and Germany forecasting to have a stalled economy for a second quarter; while overall risks for EURUSD skewed to the downside. While debt issues continue to remain the number one cause of market moving data, a weaker print could lead the currency even lower.