January 12, 2010 07:30 ET: The West would like China to revalue its currency, instead, Beijing is tightening monetary policy. Following last weeks bond yields rise and todays decision to raise the reserve requirements by 50%, global risk appetite is being dampened, especially as JPY firms up against major currencies, followed by the USD. GBPUSDs downside was limited at $1.6065, missing our $1.6045 target and recovering after stronger than expected UK BRC sales figures and international trade figures. Cable is expected to remain limited at $1.6235-40 as USD stability emerges on uncertain risk appetite. Gold drops below $1,140 after failing $1,170, eyeing interim trend lime of 1,135, a break of which could lead to 1,100.
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