AUDUSD: The Australian dollar was flat late Monday, as nervous investors looked ahead to a meeting of European Union leaders Thursday for clues to how they will spur growth.
The Australian dollar’s growing reputation as a safe-haven currency investment helped lift it to a 30-year high in July 2011, although it has since given back some of those gains as global and domestic economic concerns have gathered pace.
We expect a range for today in AUDUSD rate of 0.9990 to 1.0080 (More head wind further south)
STAND ASIDE
EURUSD: The Europe Union needs to agree on ways to stoke economic growth and ensure that countries undertaking fiscal reforms don’t suffer an unravelling of their social fabric or find their borrowing costs escalating as a result of heeding the bloc’s austerity prescriptions for financial recovery.
The European Central Bank needs to continue assuring “adequate flows of liquidity to the economy,” a task that should involve the regional central bank reviving its bond buying Securities Market Program. The ECB as of mid-May had spent 214 billion euros ($269 billion) purchasing government bonds over the previous two years in an attempt to ensure the financial system didn’t seize up for lack of liquidity, to calm markets and to try to boost the bloc’s economies. But it has refrained from using such mechanisms in recent months because of signs that their benefits might be temporary.
We expect a range for today in EURUSD rate of 1.2430 to 1.2530
We set limit BUY order for EURUSD at 1.2430
Stop loss at 1.2370
Target at 1.2490 and 1.2530
USDJPY: U.S. economic activity slipped again in May as production declined sharply, according to data published Monday. The National Activity Index compiled by the Federal Reserve Bank of Chicago fell to -0.45 last month from a revised 0.08 in April, sending the more-representative three-month moving average to -0.34 and in negative territory for the third consecutive month.
Production-related indicators were the big swing factor last month, falling to -0.20 from 0.42 in April. A negative reading for the activity index, a compendium of available and forecast economic data, points to below-trend growth.
Consumption and housing indicators remained little changed at -0.25, while the impact of data on employment, sales, orders and inventories were broadly neutral.
Further action now by the Federal Reserve to stimulate the U.S. economy would likely just push inflation higher.
We expect a range for today in USDJPY rate of 79.00 to 80.00
We set limit BUY order for USDJPY at 78.90
Stop loss at 78.30
Target at 79.60 and 80.10
