Archived IMT (2010.05.02)

CHINA RAISED RESERVE REQUIREMENT on May Day Weekend by 50-bps to 17%, making its third tightening of the year. The last tightening was announced on February 19, on the eve of the Lunar Year Holiday. Although most Asian markets are closed for May Day holiday, JPY did spike higher across the board before later stabilizing. With Europe set to close on Monday, US markets will show their own reaction to the EU and China moves. 135 bln is the latest figure of the emergency aid in loans to Greece over 3 years, 80 bln of which will be given by Eurozone nations and the remaining 55 bln from the IMF. But markets are focusing on whether Greece can survive the severe austerity policies imposed on it (8% cut in public sector salaries, 2% rise in VAT to 23%. EURUSD extended bounce to $1.3360, but $1.3380 remains the interim ceiling. USDJPY may add to gains towards 94.50 but AUDJPY recovery seen capped at 87.30 before gradual retreat towards 85.50s.