Currency Tech

EURUSD R 2: 1.2400 R 1: 1.2250 CURRENT: 1.2175 S 1: 1.1950 S 2: 1.1800

USDJPY R 2: 95.00 R 1: 93.70 CURRENT: 91.90 S 1: 89.00 S 2: 88.00

GBPUSD R 2: 1.5000 R 1: 1.4850 CURRENT: 1.4615 S 1: 1.4550 S 2: 1.4350

AUDUSD R 2: 0.8700 R 1: 0.8575 CURRENT: 0.8560 S 1: 0.8350 S 2: 0.8000

Market Brief

The EURJPY climbed to 111.86 after touching 112.01 last week, the weakest since June 4 for a third day and the USDJPY gained to 91.88 on signs the global economic recovery is gaining momentum, damping demand for the safety of JPY. The JPY weakened versus all 16 major counterparts as Asian stocks rallied for a third day after the US consumer confidence increased to 75.5, the highest since January 2008, from 73.6 in May. USDKRW declined 1.4% to 1,228.65, after rising 3.6% last week for a second day after the government and central bank said in a joint statement yesterday that lenders will be required to rein in use of foreign-exchange forwards, options and swaps to reduce volatility in capital flows and the won. Korean authorities stressed yesterday the rules are not aimed at setting a direction for the won, and they will take action should the measures trigger herd behavior.The MSCI Asia Pacific Index gained 1% after the MSCI World Index advanced 1.9% last week, Nikkei 225 climbed 1.6% to 9,856.76, the biggest gain in the Asia- Pacific region, Hang Seng Index rose 0.9% and Kospi Index increased 1%. Markets in Australia, China and the Philippines are closed today for holidays.

The EURUSD climbed to 1.2178, after earlier reaching 1.2208, the strongest since June 4 before a report will show industrial production expanded 0.5% (prev. 1.6%) for an 11th month. The ECB will buy government bonds until the financial market calms down and that the EUR's is still within a normal range, ECB member Nowotny said. The EUR strengthened against all 16 of its most-traded counterparts, gaining as much as 0.8% versus the USD. GBPUSD pared its first weekly gain in more than a month as UK factory output fell 0.4% (exp. 0.5%). The GBPUSD tumbled 1.1% to 1.4551, leaving its increase for the week at 0.7% while EURGBP gained 0.9% to 0.8317 last week.

The NZDUSD rose 0.5% today to 0.6932 as gains were tempered after RBNZ Governor Alan Bollard said the strong currency has not helped efforts to reduce the country's large investment-income deficit and overall external liabilities. He added that the trade balance has improved with strong export prices and less demand for imports but a large deficit on the investment income balance is showing no signs of enduring improvement and the strong NZD has not helped. New Zealand retail sales fell for the second time in three months in April as house prices declined and wage growth slowed. RBNZ Governor Bollard last week said private consumption and the housing market are subdued because households prefer to save rather than spend as the nation emerges from recession. Sales fell 0.3% (prev. 0.5%, exp. 0.2%), food prices fell 0.5%, fuel prices were unchanged, core sales fell 0.2% (prev. 1%, exp. -0.4%) and house prices declined 0.4%. Economists and retailers expect spending will improve as the jobless rate falls and after the government on May 20 announced income-tax cuts and an increase in sales tax, which will push up prices on Oct. 1. Bollard will likely raise borrowing costs at the next three meetings and the official cash rate will be 5% by the end of 2011, according to economists. AUDUSD declined 0.1% to 0.8495 after earlier losing as much as 0.9%, the first drop in four days, as China reported inflation in the nation accelerated in May to the quickest pace in 19 months on concern the nation may move to cool its economy.