AUDUSD: The Australian dollar plummeted Tuesday, moving below parity with the U.S. dollar for the first time since March, as a sell-off on Wall Street filtered into a global sale of all perceived riskier assets.
Australian consumer sentiment continued to crumble in August reflecting conditions in the economy that haven’t been seen since the recession of the early 1990s
Consumer sentiment in Australia fell 3.5% in August, adding to a fall of 8.3% in the previous month. The survey, which covered 1200 respondents, was largely conducted ahead of the global financial market upheavals since Friday.
The index fell to 89.6 points in August in seasonally adjusted terms from 92.8 points in July. In annual terms, the consumer sentiment index fell 24.8% in July in seasonally adjusted terms.
We expect a range for today in AUDUSD rate of 1.0240 to 1.0530 (The pair has quickly recovered from low 0.9930. We expect to see the pair crawl back toward 1.0500-50)
EURUSD: Leading economists in Germany don’t expect the country to fall into recession as the economy is robust enough to steer through the current turmoil on financial markets
Germany is urging Spain and Italy to use their gold reserves to cut down their debt levels, as the precious metal is trading at historic highs in recent sessions
Spain’s gold reserves amount only to some EUR11.3 billion, as Spain sold nearly 50% of its gold reserves between 2005 and 2007, the paper adds. Italy, however, is a different story, as it’s the world’s fourth largest holder of gold, with reserves totaling 2.45 tons, nine times more than Spain.
We expect a range for today in EURUSD rate of 1.4300 to 1.4460 (The pair might have a little resistance at 1.4420-40, break through this regions will head toward 1.4500)
USDJPY: Take the U.S.’s downgrade as an example-global markets have been grappling with signs of slowing economic growth and European debt problems, so the movement of U.S. stocks and the dollar is likely different than what it would have been had the global economy been humming along with ease.
This same type of cascading reaction occurred last April, when the euro fell 8% in the four weeks following Spain’s downgrade from AA-plus to AA. That’s the biggest currency drop in this data set, but it was exacerbated by the fact that it happened at the same time global investors were panicking about Greece’s debt, which had a stronger impact on the euro than the downgrade itself.
Then there’s the strange case of Japan, a country that appeared in this 15-point set four separate times. It was downgraded three times from February 2001 to April 2002, one notch apiece from AAA to AA-. The first two times it dropped, the Nikkei and the yen were down significantly a month later. But a month after the third downgrade-and perhaps a bit of market fatigue-both equities and the yen had jumped.
We expect a range for today in USDJPY rate of 76.50 to 77.70 (Yesterday, we set buy order limit at 76.80, we now bring our stop loss from 76.20 to 76.50, target remain the same at 77.80, 78.20 and 78.80)
