AUDUSD: Aussie over the near-term given the lack of cohesion across the Euro-zone. The Australian dollar slid to a five-week low Monday, after U.S. lawmakers failed to reach a deal on budget cuts, and a top Chinese official warned of a lengthy global recession.
Looking ahead, traders await a speech by Reserve Bank of Australia Governor Glenn Stevens on Thursday. The RBA had cut interest rates at the start of November, its first change in policy for a year.
Markets are on alert to see if the central bank is considering a second cut in coming months, while assessing the level of apprehension there is among policy makers to the debt problems in Europe and the U.S. budget talks.
We expect a range for today in AUDUSD rate of 0.9700 to 0.9900 (We expect a minor support at 0.9700 ranges, fail to support will head toward above 94.00)
Set NEW BUY order at 0.9700
Stop loss at 0.9630
Target at 0.9770, 0.9850
EURUSD: The Euro-zone situation will remain severe in the short term with a lack of confidence triggering a further flow of funds out of the peripheral economies and the severity of the contagion threat has been illustrated by the rise in French yields relative to Germany.
The banking sector will remain a very important focus in the short term and there will be the risk of a major failure as funding costs continue to increase. There will be intense pressure for a policy reversal by the ECB and German government with increased ECB bond buying. There will also be further speculation over a medium-term break-up which, ironically, could support the currency on expectations of a hard Euro area.
We expect a range for today in EURUSD rate of 1.3420 to 1.3550
Set LONG at 1.3420
Stop loss at 1.3360
Target at 1.3470, 1.3550
USDJPY: The latest US economic data has continued to show significant signs of improvement and fears over recession should continue to ease in the very short term which will provide some underlying support for the dollar.
There will still be an underlying lack of confidence in the fundamentals and the Federal Reserve will stand ready to ease policy again if necessary. International considerations will tend to dominate in the very short term and there will be further underlying support for the US currency if there is a further tightening in global credit conditions, especially if there are major global banking stresses.
We expect a range for today in USDJPY rate of 76.80 to 77.70 (We bought one below 77.00 levels and one at 77.15 – Continued to hold our trades)
Long USDJPY at 77.00 ranges (Bought last week)
Stop loss at 76.50
Target at 77.70, 78.30
