Currency Tech

EURUSD R 2: 1.2650 R 1: 1.2450 CURRENT: 1.2310 S 1: 1.2125 S 2: 1.2000

USDJPY R 2: 93.70 R 1: 92.80 CURRENT: 91.41 S 1: 89.00 S 2: 88.00

GBPUSD R 2: 1.4950 R 1: 1.4725 CURRENT: 1.4469 S 1: 1.4400 S 2: 1.4250

AUDUSD R 2: 0.8730 R 1: 0.8590 CURRENT: 0.8484 S 1: 0.8380 S 2: 0.8130

Market Brief

The USDJPY climbed to 91.38 while EURJPY rose to 112.63 as the JPY weakened against its major counterparts amid speculation political turmoil will dent the currency's safe-haven appeal after Japan's Social Democratic Party left a three-way coalition government. The JPY also fell after a poll showed that more than half of the nation's voters want Prime Minister Hatoyama to resign. Japan's industrial production increased 1.3% (prev. 1.2%, exp. 2.5%) less than economists forecast in April, the latest sign that the economic recovery may be losing momentum.RBA will probably leave the overnight cash rate target at 4.5% tomorrow unchanged after the most aggressive round of increases restrained retail sales and slashed mortgage lending by a quarter. Loans provided by banks and other finance companies gained 0.2%, the smallest gain since November, lending to home buyers rose 0.5% (prev. 0.7%), dwelling price growth slumped to 0.3%. That follows reports this month showing home-loan approvals dropped 25% to the lowest level in nine years. Investors boosted bets this month that Governor Glenn Stevens will keep Australia's policy rate unchanged until 2011. The AUDUSD traded at 0.8484. GDP growth probably slowed to 0.6% (prev. 0.9%) according to a report on June 2. Reports will show retail sales increased 0.3% in April and building approvals fell for the third month according to a report due tomorrow. Thailand's central bank will probably maintain its benchmark rate at 1.25% on June 2, Bank Indonesia may keep borrowing costs at 6.5% on June 4 and Philippines is forecast to be held at 4% on June 3.

The EURUSD was at 1.2270 while EURJPY traded at 112.63, poised for a sixth monthly loss amid concerns Europe's efforts to reduce fiscal deficits and stem a sovereign-debt crisis will undermine the region's recovery. The EURJPY fell for a second day ahead of a report today forecast to show European confidence in the economic outlook was unchanged in May, snapping two months of advances. An index of executive and consumer sentiment is expected to be at 100.6. EUR has slumped 7.9% this year amid concern swelling budget deficits will lead to government defaults and an eventual breakup of the EU. Fitch on Friday stripped Spain of its AAA credit grade, saying the nation's debt burden is likely to weigh on economic growth. The EURUSD's 14-day stochastic oscillator stayed for a sixth day below the 20 level that signals that an asset has fallen too quickly and is poised to rise.

USDCAD declined to 1.0489 on prospects BOC will raise the policy rate, boosting the yield advantage over US assets and also before a report forecast to show its economic recovery quickened in the first quarter, backing the case for the central bank to increase interest rates. GDP probably expanded at 5.9% annually in Q1 according to a report due today. BOC Governor Mark Carney will probably raise the policy rate by 0.25% to 0.5% when policy makers meet on June 1. A rate increase would boost demand for the CAD and the BOC policy move may become a tool to gauge the strength of central banks' concerns over Europe's credit crisis.