AUDUSD: The Australian dollar surged Wednesday as strong U.S. new home sales data and a successful Spanish debt auction boosted risk-sensitive currencies.
After falling steadily for much of December, the Australian dollar has recovered some of its lost footing in recent days, pushing back above US$1.0200 on Wednesday for the first time in more than a week. Aside from the improving economic data in the U.S., the currency was helped by rising equity and commodity prices throughout the U.S. and Asian day.
Westpac notes that a refusal of the currency to move much below parity would seemingly be a positive sign, but a persistent unwinding of longer term investors out of the Australian dollar in their recent data is concerning. Westpac notes long-term investors have cut their Australian dollar exposure by 38% from peak levels back in May.
We expect a range for today in AUDUSD rate of 1.0010 to 1.0100 (We avoid trading today, unless)
Set limit BUY order at 0.9890
Stop loss at 0.9830
Target at 0.9960, 1.0030
EURUSD: The euro rose to almost $1.32 against the dollar Wednesday after banks lapped up an emergency offer of three-year loans from the European Central Bank, but the gains were quickly reversed as the initial optimism over the huge injection of liquidity evaporated in thin dealing conditions.
The European primary bond market remained shut Wednesday, while the cost of insuring European sovereign and corporate debt was mixed after a successful European Central Bank Long Term Refinancing Operation three-year allotment beat market expectations.
Initial market reaction caused a very short-lived rally, but sentiment turned less bullish as market participants remained wary as the currency bloc’s debt crisis remains unresolved and questions remain around what portion of the fresh money will end up in the government bond market.
We expect a range for today in EURUSD rate of 1.2940 to 1.3120 ()
Limit BUY order at 1.2940
Stop loss at 1.2870
Target at 1.3030, 1.3110
USDJPY: Yen options rose Wednesday as investors speculated that underlying exchange rates may move sharply ahead of the European Central Bank’s much-anticipated three-year refinancing operation later in the day.
Traders said investors’ risk-taking appetite is recovering because of expectations that the operation may attract bids of more than EUR300 billion.
Traders said volatilities will continue rising in the global day, though conditions from Thursday remain unclear with volatilities depending on the situation after the ECB operation.
We expect a range for today in USDJPY rate of 77.60 to 78.20
We set limit BUY order USDJPY at 77.70
Stop loss at 77.10
Target 78.30 and 78.80
