AUDUSD: A larger than expected 50 basis-point cut Tuesday by the central bank sent the Australian dollar and bond yields sharply lower.
The relative calm followed a busy Asian session which saw the Australian dollar tumble after the Reserve Bank of Australia cut its key interest rate to 3.75% from 4.25%. Also bearing an influence was China’s official manufacturing activity index, which showed expansion in April but wasn’t good enough to cheer markets.
Aside from the Australian dollar, which fell more than a cent toward $1.03 against the greenback, holiday-thinned dealing conditions kept major currencies within tight trading ranges.
We expect a range for today in AUDUSD rate of 1.0350 to 1.0460 (Yesterday, we sold AUDUSD at 1.0320 levels, book over 120 pips)
We set limit BUY order for AUDUSD at 1.0250
Stop loss at 1.0190
Target at 1.0370 and 1.0420
EURUSD: Italy and Spain, the third- and fourth-biggest economies in the euro zone, are in recession. Investors fear Spain, in particular, might be the next in the bloc to follow Greece, Ireland and Portugal to seek an international bailout.
Politically, markets were unsettled by the French election result as the strong polling outcome for the National Front reinforced market fears that support for current economic policies was continuing to weaken. The Dutch government also tendered its resignation after failing to agree budget cuts as the Freedom party withdrew its support, maintaining fears over regional instability. More positively, there was speculation of 2013 budget agreement later in the week
We expect a range for today in EURUSD rate of 1.3180 to 1.3280 (We expect the pair to head further south toward 1.3180-1.3150)
STAND ASIDE
USDJPY: The U.S. economy’s gradual recovery still warrants the Federal Reserve’s supportive policy stance, but potential inflationary pressures may well call for a withdrawal of accommodation sooner than expected
Fed officials have been out in full force this week, following the FOMC’s April policy decision, in which it stuck to its late-2014 rate-increase guidance but stayed about the potential for additional stimulus.
We expect a range for today in USDJPY rate of 80.00 to 80.70 (Note: If the pair fall below 80.00 ranges, will add additional trade.) Closed out additional Trade!
We BUY USDJPY at 80.30 (continued to hold)
Stop loss at 79.60
Target at 80.70-90