AUDUSD: In an atmosphere of dense risk aversion as Europe’s funding and debt crisis throws up new woes on an almost daily basis, the Australian dollar, traditionally a classic risk proxy, eked out some gains Wednesday helped by robust Chinese data.
China’s second-quarter GDP rose 9.5% from a year earlier, compared with 9.7% growth in the first quarter, the National Bureau of Statistics said Wednesday. Economists had expected GDP to rise by 9.4%.
The risk-averse tone means Australian bonds, while weaker on the day, continue to enjoy firm support from offshore buyers. Earlier Wednesday, the government sold A$700 million worth of 5.5%, 2023 dated bonds, drawing a coverage ratio of 3.44 times.
We expect a range for today in AUDUSD rate of 1.0730 to 1.0800 (Yesterday we bought the pair at the price of 1.0590, then pair reach our target band at 1.0460-80 levels. Currently sitting at 1.0770 ranges, we expect a resistance at this level. If you have not close out, might consider booked those profit)
EURUSD: A temporary Greek default may be unavoidable if private bondholders voluntarily participate in a new financing program for the beleaguered country. Still, the IMF assumes a EUR33 billion private sector involvement by all bondholders through 2014 for its analysis of whether Greece’s debt is sustainable.
Euro Group officials marked progress in determining details of the next financing program for Greece to fill an estimate EUR104 billion gap in funding. The Euro Group are seeking to craft ways to involve private bondholders without causing a credit event or a ratings downgrade to selective default.
Rating agencies have warned that any private sector involvement, even if it is voluntary, would prompt them to declare a selective default on Greek debt. Since Greek banks use the sovereign debt they hold as collateral to borrow from the European Central Bank that could cause a credit squeeze.
We expect a range for today in EURUSD rate of 1.4140 to 1.4290 (We expect the pair to move to 1.3950 and 1.4050, the pair went right up to the north, currently sitting at 1.4228, we set to short the pair at 1.4290, stop loss at 1.4350, target downside at 1.4200 and 1.4140)
USDJPY: The gloomy sentiment in the financial markets got a boost Wednesday as Federal Reserve Chairman Ben Bernanke left the door open for further stimulus should the economy falter.
U.S. stocks rose sharply, gold prices hit a fresh record high and crude oil strengthened. In contrast, safe-haven assets underperformed with prices of U.S. Treasury bonds dropping and the dollar falling broadly against its main rivals including the euro.
For days, investors had been gripped with fears amid signs that the Greek debt crisis is spreading to some larger economies in the euro zone. But Bernanke’s comments, along with some upbeat data from China, buoyed appetites for risks, at least for the moment.
While Bernanke, in his semiannual testimony to lawmakers Wednesday, still held to his view that the economic recovery will strengthen in the second half, he added that the ultra-low interest rate policy will stay for an extended period and further stimulus may be needed depending on the economic outlook.
We expect a range for today in USDJPY rate of 78.50 to 79.50 (We set to buy USDJPY at 78.50, stop loss at 77.90, target at 79.20 to 79.60)
