AUDUSD: The Australian dollar was weaker late Monday, weighed by waning risk appetite and profit taking, and largely overlooking news that Prime Minster Julia Gillard will retain her position.
The local dollar took a tumble right after it was officially announced that Gillard held off a leadership challenge from rival Kevin Rudd but traders said the timing was coincidental as the outcome was well flagged.
We expect a range for today in AUDUSD rate of 1.0700 to 1.0780 (Yesterday, we shorted the pair at 1.0710 ranges, the pair fall low at 1.0649 which hit our first target range)
We re-shorted AUDUSD above 1.0750 ranges
Stop loss at 1.0830
Target at 1.690 and 1.0660
EURUSD: Standard & Poor’s changed its outlook Monday on the European Financial Stability Facility, the region’s bailout fund, to negative from developing.
The change in the outlook essentially means S&P is ruling out a chance of an upgrade to the EFSF in the next two years. A negative outlook means there is a chance of a downgrade, while a developing outlook leaves open the possibility of a downgrade or upgrade.
S&P downgraded the EFSF’s rating to double-A-plus from triple-A last month when it downgraded nine members of the euro-zone currency bloc because of the region’s ongoing debt crisis and outlook for little to no economic growth.
We expect a range for today in EURUSD rate of 1.3300 to 1.3420 (Yesterday, we place a short position a little too high above 1.3500, although the pair reached high at 1.3478 before knock down. We continued to expect the pair to head south
We short EURUSD at the current market price 1.3397
Stop loss at 1.3455
Target at 1.3340 and 1.3310
USDJPY: The yen strengthened in European trading Monday, recovering from an eight-month low against the dollar, while the euro stalled below $1.35 as traders looked ahead to Wednesday’s expected stimulus from the European Central Bank with a more cautious frame of mind.
The dollar and euro had rallied sharply against the yen in late Friday trade and early Asian hours, hitting highs of Y81.66 and Y109.95, respectively. However, both currency pairs at the peaked, triggering an unwinding of bets against the Japanese currency.
Recent yen weakness was justifiable due to the Bank of Japan’s strong declaration of war on deflation, and the rally in energy prices due to Japan’s total dependence on energy imports.
We expect a range for today in USDJPY rate of 80.20 to 80.80
We short USDJPY at the current market price 80.60
Stop loss at 80.85
Target at 80.20 and 79.70
