AUDUSD: Global economic turmoil has made returning Australia’s federal budget to surplus more difficult, but a surplus remains the best defense against macroeconomic factors, the country’s treasurer and deputy prime minister said Sunday.
Wayne Swan, in his regular economic note, added that those people who have been calling for further interest-rate cuts should also be calling for a budget surplus, not opposing one.
The global financial crisis and global turbulence had “ripped” at least A$140 billion from government revenue. This doesn’t change the fact that getting back in the black is the right course of action for an economy moving toward trend growth, with low unemployment and a record pipeline of investment
We expect a range for today in AUDUSD rate of 1.0330 to 1.0420
We BUY AUDUSD at 1.0280
Stop loss at 1.0220
Target at 1.0350 and 1.0410
EURUSD: The Euro-zone structural fears have been thrown back into sharp focus by the stresses in Spain and the tone of unease is likely to remain an important feature. There will be particular fears surrounding the banking sector and fears surrounding peripheral vulnerability in general. The ECB will be under pressure to re-activate the peripheral bond buying programme and there will be speculation over additional LTRO operations. The Euro will gain net support from expectations over capital repatriation, but underlying investment flows will make it very difficult for the Euro to sustain any gains.
We expect a range for today in EURUSD rate of 1.3150 to 1.3250
We SELL EURUSD at 1.3200 ranges
Stop loss at 1.3270 from
Target at 1.3150 to 1.3110
USDJPY: The dollar will be vulnerable to sharp selling pressure if there is any move to expand quantitative easing while hints over action would trigger more moderate losses. The overall lack of viable alternatives and global de-leveraging should still provide important US currency protection.
There will be further concerns over structural weakness in the Japanese economy especially with Japan registering a record trade deficit in the latest fiscal year. Import demand will remain strong which will tend to undermine the yen and maintain pressure for competitiveness to be retained.
We expect a range for today in USDJPY rate of 80.50 to 81.80 (We bought USDJPY at 80.80, and closed out at 81.40 ranges)
WE STAND ASIDE USDJPY
