EURUSD R 2: 1.2250 R 1: 1.2125 CURRENT: 1.2040 S 1: 1.1950 S 2: 1.1800
USDJPY R 2: 95.00 R 1: 93.70 CURRENT: 91.19 S 1: 89.00 S 2: 88.00
GBPUSD R 2: 1.4725 R 1: 1.4650 CURRENT: 1.4587 S 1: 1.4350 S 2: 1.4140
AUDUSD R 2: 0.8575 R 1: 0.8420 CURRENT: 0.8365 S 1: 0.8060 S 2: 0.7960
The USDJPY weakened 0.2% to 91.30, S&P 500 Index fell 0.6% after climbing as much as 1.5% after the Fed's Beige Book showed subdued US economic growth, increasing speculation the Fed won't raise interest rates any time soon. The Fed's business survey said that while the US economy strengthened in all 12 of the Fed's regions in April and May, driven partly by consumer and business spending, growth in many districts was modest. The Fed will hold off raising rates until 2011 according to forecasts which has been at a range of 0 - 0.25% since December 2008. Japan's GDP rose at an annual 5% (prev. 4.9%, exp. 4.2%) in Q1 driven by exports and an upward revision to consumer spending. In China, exports increased 49% and imports rose 48% while property prices rose 12.4% (prev. 12.8%), adding to signs that the recovery is on track. The USDBRL dropped 0.3% to 1.8494 as Brazilian central bank President Meirelles increased the benchmark rate 0.75% to 10.25% to rein in inflation after the GDP probably grew 9% in Q1, the fastest annual rate since 1995.
NZDUSD rose to 0.6736 while NZDJPY advanced 0.9% to 61.43 and AUDNZD lost 0.4% to 1.2361 after the RBNZ raised interest rates for the first time in three years. RBNZ Governor Bollard said that underlying inflationary pressures are expected to increase adding that given the current low level of the cash rate, it is therefore appropriate to gradually remove policy stimulus after increasing the official cash rate to 2.75% from a record-low 2.5%. The AUDNZD ended three days of gains on expectations RBNZ will boost borrowing costs at a faster pace than the RBA. AUDUSD advanced 0.6% to 0.8330 while AUDJPY moved up 0.5% to 75.98 on better-than-forecast jobs data as payrolls rose by 26,900 (exp. 20,000) and the jobless rate fell to 5.2% (exp. 5.4%). Demand for the AUD was limited as the Chinese steelmakers may delay accepting higher contract iron ore prices after steel prices fell and the European crisis worsened. The currencies were the biggest gainers among their major peers.
The EURUSD traded at 1.2004 while EURJPY traded at 109.46 near its weakest since 2001 before the ECB meets amid concern the region's sovereign debt woes will derail growth. The EURUSD was near a four-year low as the World Bank said the debt crisis created new growth hurdles and a double-dip recession was possible in some European economies. The EURUSD may extend this month's 2.5% decline after Goldman Sachs reversed a forecast for EUR to rise, saying it will fall to 1.15 in three months on continued policy mishaps. The ECB will leave rates unchanged today with President Trichet under pressure to explain how far he's prepared to buy government bonds after the ECB announced May 10 a program to purchase the debt of some nations to restore normal functioning on markets. Policy makers say they will counter the effects on money supply by draining reserves equal to the amount bought or sterilization. The market will be looking for any indications as to what their intentions are with their bond-buying sterilization and liquidity management could continue to weigh on the EURUSD which could fall toward 1.15 in the long term. The BOE is expected to keep interest rates unchanged while focus could be on budget deficit reduction plans.