Archived IMT (2011.01.14)

CHINA RAISES RESERVE REQUIREMENT RATIO by 50-bps to a record high 19.5%, but is hardly impacting risk appetite or supporting USD. The floods-damaged Aussie could not recover above parity against parity despite the broadening damage in the US currency. This means that Aussie weakness is best played against the stronger currencies, such as GBP and CAD. I reiterate my medium term bullishness in GBPAUD targeting 1.6130, followed by 1.6350. AUDCAD expected to retest 0.97 support, which can be considered as a prelim target (pref 0.9720). EURUSD rocketed to $1.3450s before retreating to $1.3370s. The much talked-about US-GE 10 year spread shrank to +0.27 from +0.53 earlier in the year. The spread is now resting above its 100-day MA of 0.25. A EURUSD close above $1.3420 would practically seal the deal for the case in favour of $1.3750.