Currency Tech

EURUSD R 2: 1.3130 R 1: 1.2885 CURRENT: 1.2729 S 1: 1.2650 S 2: 1.2522

USDJPY R 2: 95.00 R 1: 93.70 CURRENT: 92.62 S 1: 92.28 S 2: 91.56

GBPUSD R 2: 1.5130 R 1: 1.5050 CURRENT: 1.4812 S 1: 1.4780 S 2: 1.4620

AUDUSD R 2: 0.9250 R 1: 0.9135 CURRENT: 0.8978 S 1: 0.8800 S 2: 0.8750

Market Brief

The USDJPY fell after Chinese data threatened to slow down the Chinese economy and increasing the case for the JPY as a refuge currency. USDJPY traded at 92.62 after the Chinese data. China's inflation accelerated, new lending topped economists' estimates and property prices rose by a record, highlighting the threat of overheating. Consumer prices rose 2.8%, the fastest pace in 18 months, and property prices jumped 12.8% the most since 2005 while new lending of 774 billion Yuan ($113 billion), announced by the central bank, was more than forecast. Producer prices jumped 6.8% and industrial production rose 17.8% in April from a year earlier (prev. 18.1%, exp. 18.5%). Chinese policy makers should focus on preventing excessive gains in asset prices and liquidity as Europe's rescue package makes another global slump less likely, according to the central bank. Price pressures have been building throughout the economy, strengthening the case for higher interest rates and a stronger Yuan and investors are concerned stimulus withdrawal and a slowdown in construction could choke off growth after an 11.9% expansion in Q1.The EURUSD declined to 1.2715 after gaining as much as 2.7% to 1.3094 while the EURJPY fell to 117.88 for the first time in three days; erasing earlier gains on concern the aid won't solve the region's debt issues. The EUR declined against most majors as IMF's Belka said that he doesn't consider the package a long term solution. Greece may have its credit rating lowered to junk within the next month, Moody's said yesterday, citing the country's dismal economic prospects. ECB's Axel Weber said that decision to buy government bonds, a move designed to help reduce financing costs for countries including Greece, poses significant stability risks. Traders are betting the currency will resume its decline as Europe's economic recovery trails behind that in the US, prompting the ECB to keep its main refinancing rate at 1% this year while the Fed starts raising rates. GBPUSD pared its advance as Brown said he's willing to resign as Labor leader so negotiations on a formal coalition government with Clegg's party can progress. The GBPUSD fell to 1.4803 after surging 1.7% to 1.5054 before Brown's announcement. The BOE held its main interest rate at 0.5% and also kept its asset-purchase plan at 200 billion GBP. The bank will publish its quarterly inflation report tomorrow.

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