Currency Tech

EURUSD R 2: 1.2725 R 1: 1.2450 CURRENT: 1.2358 S 1: 1.2000 S 2: 1.1800

USDJPY R 2: 93.70 R 1: 92.80 CURRENT: 91.66 S 1: 90.85 S 2: 89.00

GBPUSD R 2: 1.4725 R 1: 1.4550 CURRENT: 1.4403 S 1: 1.4110 S 2: 1.3830

AUDUSD R 2: 0.8710 R 1: 0.8575 CURRENT: 0.8427 S 1: 0.8270 S 2: 0.8160

Market Brief

The USDJPY traded at 91.78 as Japan's economy grew less than forecast in Q1 as an export-led recovery failed to stoke consumer spending, putting pressure on the BOJ to do more to end deflation as it begins a two-day meeting. GDP rose 4.9% in the three months to March (prev. 4.2%, exp. 5.5%), nominal GDP gained 1.2% on a quarterly basis, Consumer spending rose 0.3% in Q1 (prev. 1.7%), business spending gained 1% (prev. 1.3%) and housing investment climbed 0.3% the first increase in five quarters. Stocks fell and Finance Minister Naoto Kan said he expects the BOJ to support an economy with flexible and appropriate policy and that officials must be cautious about calling the recovery self-sustaining. Singapore today reporting GDP of 38.6% and Taiwan forecast to say its expansion accelerated in Q1 leading to signs that Asian economies are growing led by China. Nikkei dropped 0.7% to 10,113.50 bringing its slide in the past month to 7.2%. The BOJ starts a two-day policy meeting today, probably keep the benchmark interest rate at 0.1% and may announce an outline of the lending plan. The BOJ is unlikely to change their policies as a result of the GDP report and as long as deflation continues, the government's going to continue demanding more from the BOJ to beat deflation.AUDNZD declined to as low as 1.2292, the lowest since Oct. 28 from 1.2496 yesterday and NZDUSD rose 1% to 0.6847 after the New Zealand government said it will raise the sales tax for the first time in two decades and cut income taxes to encourage saving. New Zealand's sales tax will increase to 15% from 12.5% on Oct. 1 while income tax will fall to 33% from 38%. Finance Minister Bill English wants to reduce New Zealand's foreign debt, which is about 90% of GDP by encouraging more people into work and boosting investment. English today forecast net public debt will rise to 27% of GDP by 2015 from 14% this year. The budget cash deficit is forecast to widen to $9.1 billion in the year ending June 30, 2011. AUDJPY declined 3.6% to 76.85 for a sixth day, the longest losing streak in 16 months, while AUDUSD declined 2.7% to 0.8411 amid concern Europe's debt crisis will derail the global economy and sap demand for higher-yielding assets. Expectations for rate increases in New Zealand are strong, while the budget announcement fueled an additional catalyst to buy the nation's currency.

The EURUSD weakened, trimming yesterday's gains from a four-year low, on concern the pace of Europe's economic recovery will slow as governments combat a debt crisis with spending cuts. EURUSD slid 0.5% to 1.2351 before a European report that may show consumer confidence deteriorated to -16 (prev. -15) for the first time in three months. The currency rebounded yesterday after Germany's ban of naked short sales of sovereign debt sent the currency to the lowest since April 2006 paring its 1.8% increase to 1.2415 after it fell to as low as 1.2322. The EURJPY slipped to 113.36. EURUSD weakened before German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble host talks on financial regulation today in Berlin.

The US leading indicators probably rose 0.2% in April, the smallest gain since March 2009 while other reports today will show jobless claims were little changed at 440K and manufacturing in the Philadelphia region grew this month to 21.3.