AUDUSD: The Australian dollar edged higher on Friday, though the move did little to erase a week’s worth of steady declines for the country’s currency.
In a week where Italy’s bond yields have sparked worries that the euro zone may be ruptured in coming months, the Australian dollar felt the brunt of heavy risk-sensitive selling in currencies. In just two days, the Australian dollar slipped more than 2.5% against its U.S. counterpart, with even a robust report on the local employment picture doing little to stem the selling.
For strategists, the developments in Europe are accelerating the risk that Australia’s central bank will have to make further interest rate cuts following a 25 basis point rate cut from the bank just this month.
We expect a range for today in AUDUSD rate of 1.0280 TO 1.0340 (We expect the pair to edge higher. Last week we short the pair at 1.0150, the pair drop low to 1.0104, which hit our first target at 1.0110).
Set to short at 1.0340
Stop loss at 1.0380
Target at 1.280, 1.0230
EURUSD: European economy could plunge into recession if no rapid measures are taken by the governments and financial authorities as well as the European Central Bank.
European central banks remains a lender of last resort for solvent but illiquid banks, the European Central Bank “must not be” a lender of last resort for sovereign nations because that would go against the European Union treaty as well as against the ECB’s mandate
Pressure on the ECB to start acting as a lender of last resort for European governments has been intensifying lately as Italian government bond yields reached record highs last week, raising the country’s financing costs even further.
We expect a range for today in EURUSD rate of 1.3700 to 1.3840
Set Short EURUSD at 1.3840 ranges
Stop loss at 1.3900
Target at 1.3780, 1.3720
USDJPY: The growing appreciation of how much financial problems can affect the broader economy means the Federal Reserve must give those factors greater weight when making monetary policy
Traditionally, the Federal Reserve has been very hesitant to use the monetary-policy-making tools at its disposal to do things like counter rising imbalances in a given financial sector, or part of the economy. The thinking has been that the blunt tools of interest-rate changes and other policy actions influence the economy very broadly, and employing them to burst a bubble could likely impose too great a price on the overall economy.
We expect a range for today in USDJPY rate of 77.00 to 77.50
Long USDJPY at 77.15
Stop loss at 76.50
Target at 77.70, 78.30
