[AndrewWoo]

Both the USD and JPY fell overnight on improving risk appetite, on the safe passage of GM's Chapter Eleven bankruptcy filing and higher equities looking for better efficiency of the corporate sector. US Treasury selloff on inflation concerns also kept alive expectations of more diversification away from USD assets. A larger-than-expected rise in the prices paid index (to 43.5 in May from 32.0 in April) in the US ISM manufacturing report helped foster fears of inflation. However, EUR-USD held the upward-sloped trend resistance and posted a doji (indecision) candle on profit taking ahead of Thursday's ECB policy decision. The JPY fell against all major currencies overnight. EURJPY has also held the April 6 high at 137.41. US Treasury Secretary Geithner made statements in Beijing to encourage US Treasury investment, emphasizing the US intentions to bring down the fiscal deficit once the crisis is past. He also referred to the US commitment to a strong USD, also indicating that a more flexible yuan is in China's interest.