- BIS annual report warns emerging economies not to build outsized FX reserves owing to the financial crisis.
- Russia sees 2009 GDP falling by 8.5%; 2010 expected up 0.1%
- Chicago Fed national activity index -2.30 in May versus -2.27 in April
- Dallas Fed manufacturing index -20.4 versus -21.5
- Brazil extends stimulus measures
- Chicago Fed Midwest index 78.2 in May from 80.7 in April; lowest since 1993
- Italian PM Berlusconi: G8 likely to adopt sanctions versus Iran
- Nikkei: China to increase petroleum reserve 160% over next 5 years
- Bernie Madoff sentenced to 150 years in prison for Ponzi scheme
EUR/USD traded quietly during the morning session, rebounding froma dip in London to trade between 1.4045 and 1.4080 for much of the morning before adding to gains modestly early in the afternoon on reports that China is prepared to add its petroleum reserves by 160% over the next 5 years.
EUR/JPY was well supported as well, breaking through repeated resistance in the 135 area to trade as high as 135.45, testing the 20 day moving average before stalling. USD/JPY was 95.30/60 for several hours before rallying to 96.16 as the cross took off to the topside. Firm equities and commodities and a bounce from trendline support at 95.17 helped spur the dollar rally. Trendline resistance on the hourly charts comes in around 96.20 on the hourly charts.
Cable was underpinned by reports of UK clearer buying in cable, repatriating profits in preparation for paying quarterly dividends 1.6601, 1.6621 and 1.6661 highs are back within reach.
AUD/USD absorbed heavy sales below 0.8000 overnight. A US custody bank was the main buyer, helping spark a fresh round of short-covering followed by a renewed push into the relfation trade. The broad CRB index rose 1.2%. USD/CAD held firm for much of the session, losing its link to oil and trading in line with dollar weakness. It traded 1.1510/1.1600 and ends the day at 1.1565.
