Currency Tech

R 2: 1.3250
R 1: 1.3000
CURRENT: 1.2800
S 1: 1.2680
S 2: 1.2540

R 2: 87.20
R 1: 86.80
CURRENT: 85.30
S 1: 85.00
S 2: 84.50

R 2: 1.5925
R 1: 1.5750
CURRENT: 1.5562
S 1: 1.5525
S 2: 1.5350

R 2: 0.9200
R 1: 0.9070
CURRENT: 0.8900
S 1: 0.8810
S 2: 0.8725

Market Brief

The JPY rose toward a seven-week high against the EUR on signs the global economic recovery is slowing, supporting demand for Japan's currency as a refuge. The JPY headed for a weekly gain versus 15 of 16 major counterparts before reports next week that may show US home sales fell, Japanese export growth slowed and German business sentiment weakened.

The EURCHF fell to the lowest since July before French President Nicholas Sarkozy meets Finance Minister Christine Lagarde today to prepare for next month's budget. Australia's USD was set for a second weekly loss before a national election tomorrow. Renewed worries about the global outlook are spurring risk aversion, which should continue to support 'safe haven' currencies like the JPY, the CHF and the USD. EURJPY declined to 109.20 after reaching 109.02, the lowest since July 1, USDJPY was at 85.30, EURCHF declined to 1.3194 after touching 1.3188, the weakest since July 1 and EURUSD slipped to 1.2801.

AUDJPY approached a four-week low as polls signaled tomorrow's election may result in a hung parliament and differences arise on the mining sector tax. The AUDUSD fell to 0.8891 heading for a 0.4% loss this week while AUDJPY declined to 75.86.South Korea's won slipped 0.8% to 1,182.23 leading Asian currencies lower as the MSCI Asia Pacific Index slid 1.4% and Nikkei 225 lost 1.9%. Purchases of existing US homes probably fell 13.9% (prev. -5.1%) according to a report due on Aug. 24, Japan's export growth slowed to 21.8% (prev. 27.7%) and the IFO German business climate index slid to 105.5 (prev. 106.2) according to reports due on Aug. 25. Any negative data in markets is leading investors to shift sentiment towards risk aversion and in turn leading the JPY to keep strengthening. The JPY has gained 14% this year, the best performance among 10 developed-world currencies.

Gains in the JPY were tempered on speculation the Japanese government will take steps to counter this week's 1% appreciation versus the USD. The probability the BOJ will intervene in currency markets is at a six-year high of 51% according to Morgan Stanley and Japan hasn't intervened to weaken its currency since 2004. The JPY's climb to a 15-year high of 84.73 on Aug. 11 has stoked concern that exporters' earnings could weaken and deflation might deepen with Finance Minister Noda meeting with Prime Minister Kan next week to discuss the economy and currency.