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Asian Snap: China revives the reserve currency debate and pushes for more Forex diversification

Thu, Jul 2 2009, 09:20 GMT
by Peter Rosentreich

ACM - Advanced Currency Markets

Market Brief

Vice foreign minister He Yafei said yesterday that he wasn’t aware that China had asked the issue of a global reserve currency to be on the agenda for next week’s G8 summit. This saw the dollar drop, sending the EURUSD to a high of 1.4201. Despite the consternation at the minister’s misinformation his comments on the need for a more stable and potentially non-sovereign global reserve currency ignited debate on the matter – this isn’t much of a surprise as China is the largest holder of foreign exchange reserves and U.S Treasuries.

Focus today is on the NFP’s (12:30 GMT) and ECB rate decisions (11:45 GMT). Currency markets have been quite jittery as dollar driven moves show an inherent “tug of war” between the risk adverse and the risk takers. ADP report came in at -473K yesterday while consensus was at -395K – Consensus for the NFP’s is at -365K with some economists expecting as much as -425K. A weaker number would be bullish dollar as it would reaffirm the plight of the risk adverse. Riksbank cut it’s rates this morning by 25bps – another sign that we haven’t seen the end of this recession. The ECB is largely expected to keep it’s rates at 1.00%

Currency Tech

AUDUSD
R 3: 0.8375
R 2: 0.8263
R 1: 0.8150
CURRENT: 0.8026
S 1: 0.8025
S 2: 0.7985
S 3: 0.7930

EURJPY
R 3: 139.20
R 2: 138.33
R 1: 136.46
CURRENT: 136.34
S 1: 135.04
S 2: 134.35
S 3: 133.00

USDSGD
R 3: 1.4800
R 2: 1.4748
R 1: 1.4649
CURRENT: 1.4490
S 1: 1.4454
S 2: 1.4385
S 3: 1.4334

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot

Published on  Thu, Jul 2 2009, 09:28 GMT