AUDUSD: The Australian dollar strengthened on Wednesday, boosted in part by an improving stock performance in Australia.
Despite the gains, however, traders and analysts noted that more increases might not be in the cards in the coming days as global risk tolerance remains low and resistance looms close for the currency.
For the Australian dollar to push higher and breach US$1.0500, it will require a sharp paring of bets that the Reserve Bank of Australia will ease policy and improved sentiment on global growth prospects.
We expect a range for today in AUDUSD rate of 1.0500 to 1.0600 (We expect further bullish for the AUDUSD, possible head toward 1.0650. We set short position at 1.0650, stop loss at 1.0710, target at 1.0580, and 1.0520)
EURUSD: France and Germany Wednesday increased the pressure on their euro-zone peers to improve fiscal discipline in the bloc by proposing to cut the region’s wayward spenders off from key European Union transfer funds.
The proposal marks an effort to boost fiscal discipline across the euro zone by incentivizing countries to rein in spending and cut their budget gaps. But the idea is controversial and could have difficulty being enforced, if history is any guide. The euro zone has repeatedly failed to impose financial penalties on profligate members and is still in the process of debating more automatic sanctions for deficit-breaching nations.
The European Union is making EUR350 billion available for structural and cohesion funds between 2007 and 2013. EURO economic growth and competitiveness and could be used to improve fiscal discipline as they could be cut to countries flouting euro-zone stability rules.
We expect a range for today in EURUSD rate of 1.4330 to 1.4460 (Our view for today that we expect further down trend toward 1.4330, break the support will likely head toward 1.4230)
USDJPY: Domestic banks are flush; they have on deposit at the 12 Federal Reserve banks some $1.6 trillion in excess reserves. These excess bank reserves are waiting on the sidelines to be lent to businesses.
U.S. producer prices climbed last month, an indication that building inflation pressures could leave less room for the Federal Reserve to boost the economy by easing credit. The index of producer prices, which measures how much manufacturers and wholesalers pay for goods and materials, rose a seasonally adjusted 0.2% in July, the Labor Department said Wednesday. That followed a 0.4% dip in June.
The report comes amid mixed signals for the economy and worries about a weaker U.S. outlook.
The Federal Reserve last week promised to keep its benchmark short-term interest rate close to zero for at least another two years in an effort to spur growth. The central bank could be constrained from taking further action if producers pass on higher costs to consumers and inflation stays above its informal target of close to 2.0%.
We expect a range for today in USDJPY rate of 76.40 to 76.90 (We expect the pair continue sideway, but slightly upward. We decide to entry LONG at the current market price 76.60 ranges, stop loss at 76.00, target at 76.90 and 77.20)
