Currency Tech

EURUSD R 2: 1.2650 R 1: 1.2450 CURRENT: 1.2231 S 1: 1.2125 S 2: 1.2000

USDJPY R 2: 93.70 R 1: 92.80 CURRENT: 90.05 S 1: 89.00 S 2: 88.00

GBPUSD R 2: 1.4725 R 1: 1.4550 CURRENT: 1.4415 S 1: 1.4110 S 2: 1.3830

AUDUSD R 2: 0.8575 R 1: 0.8380 CURRENT: 0.8276 S 1: 0.8130 S 2: 0.8040

Market Brief

The EURJPY climbed to 110.01 after falling to 108.84 on May 25, the lowest since November 2001 while the USDJPY climbed to 90.01, ending a three-day decline as signs Asia-Pacific economies are gathering momentum damped demand for safer assets. JPY weakened against all counterparts after New Zealand posted its first annual trade surplus since 2002 and Japanese exports rose 40.4% (prev. 43.5%, exp. 38.3%) for a fifth month in April. The JPY also fell after a government report showed Japanese investors bought the largest amount of foreign bonds in eight months. The MSCI Asia-Pacific Index rose 0.4% to 110.23, poised for the worst monthly performance since October 2008 and S&P 500 Index futures added 0.5%. USDKRW fell 1.3% to 1,236.15 for the first time in three days after the BOK forecast a $2.5 billion current- account surplus for May and reported a $1.49 billion surplus for April and forecast inflows for this month will be the highest since November.The EURUSD climbed to 1.2222 after dropping to 1.2144 on May 19, the lowest level since April 2006. The EURUSD rebounded as the 14-day RSI fell to around 32, close to the 30 threshold that is a sign an asset is poised to reverse course as China may consider reducing its investment in European government bonds spurred concern the region's credit crunch will worsen. Chinese officials have been meeting with foreign bankers in recent days to review the country's holdings of EU debt in light of the region's fiscal crisis. French household sentiment weakened to -38 (prev. -37) according to a report to be released today. The EURUSD also climbed amid speculation Europe's debt crisis had triggered excessive declines.

The OECD said the BOE should scale back its bond purchases in the second half of 2010 and start raising interest rates no later than the end of this year as inflation pressures mount. Growth will accelerate to 2.5% in 2011, helped by a pickup in consumer spending and business investment and as the weaker GBP helps exports.

NZDUSD gained 0.4% to 0.6655 and NZDJPY advanced 0.5% to 59.92 as New Zealand's trade surplus widened as imports of crude oil and machinery declined and rising commodity prices kept exports near record levels. The surplus increased by NZ$161 million to NZ$656 million (prev. NZ$590 million), first annual trade surplus since July 2002. The AUDUSD fell to 0.8253 as Australian business investment unexpectedly fell last quarter, as a decline in spending by manufacturers offset a rebound by mining companies. Capital spending dropped 0.2% (prev. 6.1%, exp. 2.5%), spending on buildings and structures rose 6.7% in Q1, company investment in new plant and equipment declined 6%, mining investment rose 2.6%, the first gain in five quarters and manufacturing dropped 14.7%.

Today's news would be mainly the US GDP figures which are expected to rise to 3.4% (prev. 3.2) giving rise to optimism that the economy is recovering as personal consumption expected to increase to 3.8% (prev. 3.6) and jobless claims expected to decline 16,000 to 455,000 (prev. 471,000). From the EU, Germany would release inflation data with MoM to increase by 0.1% (prev. -0.1%) and YoY to increase by 1.2% (prev. 1%).