Currency Tech

EURUSD R 2: 1.2650 R 1: 1.2450 CURRENT: 1.2310 S 1: 1.2125 S 2: 1.2000

USDJPY R 2: 93.70 R 1: 92.80 CURRENT: 91.16 S 1: 89.00 S 2: 88.00

GBPUSD R 2: 1.4950 R 1: 1.4725 CURRENT: 1.4555 S 1: 1.4400 S 2: 1.4250

AUDUSD R 2: 0.8730 R 1: 0.8590 CURRENT: 0.8510 S 1: 0.8380 S 2: 0.8130

Market Brief

The USDJPY rose to a one- week high of 91.37 before a report forecast to show US consumer spending gained 0.3% and incomes climbed 0.4%, adding to signs the nation's economic recovery remains on track. The JPY fell against the AUD and NZD as Asian stocks rose and before a report forecast to show on May 31 Japan's industrial production advanced 3% (prev. 1.2%). Japan's unemployment rate unexpectedly rose to 5.1% (prev. 5%), losing a net 280,000 jobs, Retail sales rose 4.9%, household spending dropped 0.7% (exp. 2.5%) and deflation deepened, signaling domestic demand is restraining the nation's recovery from its worst postwar recession. Consumer prices excluding fresh food slid 1.5% (prev. 1.2%) after government figures showed an extended rebound in exports, driven by demand from Asia's emerging economies, and highlight Japan's reliance on trade to sustain growth. Finance Minister Naoto Kan said he will try to spur employment that's crucial to overcoming price declines. The drop in consumer prices was exacerbated by the government's introduction of a waiver on high school tuition fees to assist households. The BOJ has estimated the step will lower core prices by about 0.5%. The BOJ has faced pressure to fight deflation from the government, whose ability to spur the economy is constrained by record public debt. Kan has been urging the bank to adopt an inflation target, and today reiterated that the government and the BOJ will work together to fight deflation.AUDUSD traded at 0.8516 after rising 2.4% yesterday and AUDJPY advanced 0.2% to 77.65 for its first weekly advance in more than a month, as Asian equities extended a global rally, boosting demand for higher- yielding assets. NZDUSD strengthened 0.1% to 0.6842 after rising 3.2% yesterday and NZDJPY climbed to 62.38 heading for a 2.1% increase since May 21 for its first five-day gain in four weeks before a meeting where the BOC may become the first G7 nation to increase borrowing costs since the end of the global financial crisis. Both currencies are set for their worst monthly slide in more than a year on concern efforts in the EU to curb deficits will damp growth. Both also surged yesterday after China's foreign-exchange regulator affirmed its commitment to investing in Europe, triggering rallies in stocks and commodities. AUDUSD may struggle to rise above the 0.8575 level before a meeting of RBA next week when policy makers are forecast to leave rates unchanged and release Q1 GDP data on June 2. The MSCI Asia Pacific Index strengthened 1.6%, gaining for a third day.

The EURUSD dropped to 1.2321 and has fallen 7.3% this month curbing yesterday's 1.5% rally amid expectations stricter financial regulation in the wake of Europe's debt crisis will curtail the region's growth. The EURJPY was at 112.37, having dropped 0.7% this week heading for a fifth weekly loss as Japan's Finance Minister Naoto Kan today said the G20 summit next week may address the crisis' impact on currencies and financial regulations. The EUR headed for a monthly drop after US Treasury Secretary Geithner yesterday said the US and Europe are in broad agreement on the need for tighter market regulation.