AUDUSD: Fears over the Asian economy eased which helped underpin the Australian currency, although there were still doubts surrounding the Chinese outlook which will be tested once China returns from the week-long holiday break.
While China’s secular growth has certainly supported the level of the Australian dollar over the last decade, the Australian dollar is not a proxy for cyclical views on domestic Chinese growth
We expect a range for today in AUDUSD rate of 1.0480 to 1.0615 (Yesterday, we set short position at 1.0670; the pair reach both target at 1.0580 and 1.0550. we expect the pair continued to head further south toward 1.0500)
WE AVOID TRADING THE PAIR TODAY
EURUSD: Italian prime minister Mario Monti said his government was “very satisfied” with the outcome of the European summit that agreed Monday to a new pact imposing tighter fiscal discipline on 25 European Union members. He added that it doesn’t include additional constraints for Italy on the debt side.
A total of 25 EU member states agreed Monday to join and sign a new fiscal treaty designed to impose tighter deficit and debt discipline. Britain and the Czech Republic are the two countries that opted out.
Cameron reiterated that the new treaty placed no obligations on the U.K., and the U.K. would not be signing or ratifying it. The U.K. was reserving its position because there remained a number of legal concerns about it.
We expect a range for today in EURUSD rate of 1.3070 to 1.3180
WE AVOID TRADING THE PAIR TODAY
USDJPY: Americans’ incomes in December grew at the fastest pace in nine months, but people increased savings rather than spending, a possible indication that consumers are cautious about the economy.
The government’s latest reading on unemployment is due out on Friday. Economists expect the rate to edge up to 8.6% from 8.5%last month, its lowest mark in nearly two years.
The labor market showed signs of improvement late last year and that helped push up incomes. If the economy continues adding jobs, that should be a positive for both incomes and spending.
We expect a range for today in USDJPY rate of 76.20 to 76.80 (We got hit by stop loss. We expect the pair to have some support at 76.00, below that would be a great support by Japanese intervention.)
Set BUY STOP at 76.42
Stop loss at 76.20 or 75.70
Target 76.80 and 77.10
