AUDUSD: The Australian dollar gave back nearly all of a late Friday and early Monday gain on signs of economic weakness in the country.
Just a day before Australia’s central bank is set to decide on interest rates for July, two sets of data on Australian consumer demand disappointed to the downside. In the reports, May retail sales slid 0.6%, while building approvals declined 7.9% in the month.
At 0610 GMT, the Australian dollar was at US$1.0720, up from US$1.0712 late Friday. Still, the currency had reached as high as US$1.0787 in early action Monday after euro-zone governments over the weekend agreed to pay Greece the next tranche of last year’s bailout package.
Even while economists continue to forecast at least one rate hike from Australia’s central bank by the end of the year, interest-rate swaps were pricing in a 30% chance of a rate cut by October, up from 20% before the retail sales data.
We expect a range for today in AUDUSD rate of 1.0680 to 1.0770 (Yesterday, we successfully shorted the pair at 1.0775 and booked profit at 1.0725, the pair drop low to 1.0715. We now carefully watch whether the pair able to support at 1.0690 ranges, if not it will heading down toward 1.0630)
EURUSD: The euro steadied against the dollar in European hours Monday, holding above $1.45 as some of the fresh Greek angst generated by Standard & Poor’s Corp. faded and traders looked ahead to a possible euro-zone interest rate rise.
Standard & Poor’s had warned that a debt rollover plan for Greece could amount to a default, spooking currency markets in Asian hours. But the effect was fleeting, with activity slowing and U.S. markets set to remain shut due to a public holiday. While the S&P statement was merely a confirmation of prior comments from the ratings agency, it was a jarring reminder to investors that Greece’s travails are far from over.
The EU is also assessing whether a tax on currency transactions would be legally feasible. That would bring total revenue from the tax to EUR54 billion annually, the newspaper reports.
We expect a range for today in EURUSD rate of 1.4480 to 1.4580 (Yesterday, we set to short the pair at 1.4580, then pair reached high 1.4575 then drop down toward 1.4500 areas. We missed the trade, we expect the pair continued to head south due to speculation from SP and tax on currency.)
USDJPY: options rose on Monday due to regular buy-back operations, but Tokyo dealers warned volatilities may start falling as spot trading is likely to be quiet in the coming days.
It’s usual for volatilities to rise on Monday because investors often buy back short-term contracts that they’ve sold on Friday. This is aimed at minimizing losses on the option’s time value, one of the two main components that determine the deal’s value.
Looking ahead, however, investors expect volatilities to fall. That’s because market participants are in a wait-and-see mood ahead of Friday’s key U.S. non-farm payrolls data, meaning spot moves are expected to be somewhat quiet until then.
We expect a range for today in USDJPY rate of 80.00 to 81.00 (In the last few weeks, We did not trade much on USDJPY, only last week we shorted the pair at 81 levels and booked some profit. We expect the pair continue to head south, so we place a limit BUY order between 80.00 to 80.20 ranges, stop loss at 79.50, target 80.70 to 81.10. Note: If the pair falling below 80.00 we may entry additional unit)
