AUDUSD: The rapid ascent of the Australian dollar has forced more than half of the country’s small and medium-sized exporters to increase their currency hedging activity.
Commonwealth Bank said that in addition to the 53% of exporters now planning to hedge their exposure, 68% of importers also plan to hedge their exposure over the next three months. Just a few months ago in April, 48% of exporters planned to hedge and 64% of importers. Before the Australian dollar’s recent surge–a move that has seen the currency add more than 30% in a year against the U.S. dollar to trade at its highest level in 30 years–only 34% of importers were hedging in January 2010.
To be sure, the move is having an opposite effect on importers, with Commonwealth Bank noting 17% of importers are looking to increase their work force in part thanks to the higher Australian dollar. By comparison, more medium-sized businesses with annual turnover of A$150 to A$500 million are planning to cut jobs than they were three months before as a result of the high Australian dollar.
We expect a range for today in AUDUSD rate of 1.0330 to 1.0480 (Yesterday, we short the trade at 1.0510 and we book profit for 60 pips, the pair currently drop low at 1.0440. We now consider set limit BUY order at 1.0330, stop loss at 1.0270, target upside at 1.0380 and 1.0420-60)
EURUSD: Euro-zone banks’ access to funding in dollars has become more difficult recently as their U.S. counterparties have become more selective about providing funding to non-domestic banks. But the situation is far less severe than in 2008, when the global credit crisis first hit, and banks stopped providing liquidity to one another. European banks have several other means on hand at present to ensure their dollar funding other than tapping the unsecured dollar funding markets
European banks may also cover their dollar liquidity needs by secured repurchase agreements with other banks. Furthermore, European banks made use of the benign market conditions of the first part of this year to ensure their dollar financing to a greater extent than they needed at the time, or even for the whole of this year. European banks have also improved their capital base, making them less vulnerable to financial strains.
We expect a range for today in EURUSD rate of 1.4360 to 1.4460 (Another winning for our EURUSD, we place a short trade at 1.0460. We are now close the trade with 65 pips profit. Those who wish to hold their short position, consider trail stop loss from 1.4510 to 1.4450 and target further toward 1.4360 and 1.4320).
USDJPY: U.S home prices increased in June for the third straight month, a government agency said Wednesday, a sign that home prices have remained stable this summer even as sales slumped.
Home prices rose 0.9% on a seasonally adjusted basis from May, according to the Federal Housing Finance Agency’s monthly home-price index. On a quarterly basis, home prices fell 0.6% from the first quarter.
Despite the monthly increase, the ailing U.S. housing market remains one of the major weak spots for the economy. The FHFA index is 18.8% below its peak in April 2007. This week brought more negative news for the ailing housing market. New-home sales fell 0.7% in July to a seasonally adjusted annual rate of 298,000, the lowest level since February.
We expect a range for today in USDJPY rate of 76.60 to 77.20 (As mentioned yesterday, We will go long at 76.30, stop loss at 75.70, target at 76.70 and 77.00.Alternatively, we short the trade at 77.20, stop loss at 77.70, target at 76.80 and 76.50. The pair reach high at 77.10, before it took off.)
