AUDUSD: Weaker than expected jobs numbers sent the Australian dollar to session lows Thursday as analysts said rising unemployment is beginning to show a trend, raising the prospect of a possible rate cut in coming months.
Unemployment rose to a higher-than-expected 5.3% in August–a near 12 month high–from 5.1% in July, while the number of employed fell 9,700, the Australian Bureau of Statistics said Thursday. Economists had expected 5.1% unemployment and 11,000 new jobs.
The data prompted a flurry of analysts to predict the Reserve Bank of Australia may need to begin easing policy sooner than anticipated, although the rates market has long been pricing in rate cuts.
We expect a range for today in AUDUSD rate of 1.0520 to 1.0655 (We prefer to stay out the market range today.)
EURUSD: Euro-zone countries could generate between EUR20 billion and EUR40 billion to support their bailout fund by introducing a tax on financial transactions, a French government minister said Thursday.
The European Union plans to press the case for a tax on trading shares and bonds at a summit of the Group of 20 leading economies in November. France and Germany, the euro zone’s two largest economies, have already backed the idea. But there is no agreement yet on how to spend the revenues generated.
We expect a range for today in EURUSD rate of 1.3920 to 1.4000 (The pair should have a little support at 1.3900 region, we decide to entry at the current market 1.3920 ranges, stop loss at 1.3860, target at 1.3960, 1.4010 toward 1.4150.)
USDJPY: Many investors expect the Federal Open Market Committee to announce a shift in the composition of the central bank’s bond portfolio so that it holds more long-term securities and fewer short-term ones. The measure, dubbed “Operation Twist” in financial markets, would be aimed at boosting the economy by lowering long-term interest rates further.
Operation twist, or extending the maturity of its existing bond holdings, would represent a middle option for the Fed. The more aggressive and controversial step would be to expand its $2.325 trillion portfolio of government and mortgage debt by launching a third round of bond purchases–a move known as QE3 in markets. A milder step being considered by Fed officials is a reduction in the 0.25% interest rate that is paid to banks that keep cash on reserve at the central bank in an effort to get them to lend more.
Bernanke highlighted several weak spots in the economy, including unusually weak consumer spending and how debt problems in Europe and the U.S. likely hurt household and business confidence over the summer. He also noted the Fed expects inflation to moderate over time following the spike caused earlier this year by high energy and food prices.
We expect a range for today in USDJPY rate of 77.00 to 77.80 (We avoid trading the pair today.)
