Archived IMT (2010.05.20)

USD 3-MONTH LIBOR REACHES 0.48%, doubling the levels from the November lows, as it reflects the escalating cost of USD-funding for US and non-US banks. Lack of trust among banks as well as liquidity difficulties are the main culprit. Fed has responded by providing USD-funding through FX swaps with major central banks. If these measures continue to show little effect in alleviating funding costs, central banks may have no choice but to carry out outright interventions (selling USD vs EUR). Meanwhile, AUD, CAD, NZD continue to be the PREFERRED SHORTS as traders take a break from assaulting EUR ahead of a possible intervention. AUDUSD eyes 0.82, followed by 0.8130-40. GBP WEAKNESS broadens as EURGBP break sabove 0.8620s eyeing 0.8710 but CHF STRENGTH prevening EURCHF from regaining 1.43.