AUDUSD: The Australian dollar inched higher again Tuesday, briefly touching parity with the U.S. dollar, helped in part by improved sentiment surrounding Europe. While the Australian dollar’s now week-long bounce back has now pushed it back on the precipice of parity with the U.S. dollar, Australian government bonds have had a similarly sharp move.
The upbeat mood was also given some oomph by news Friday of stronger-than-expected U.S. employment data, while signs of further weakness in Australia’s labor market were largely overlooked.
Locally, a survey of job advertising by ANZ Bank was the focus. It showed a further slide in September, adding to arguments for the central bank to cut interest rates soon rather than later. The total number of job ads in newspapers and on the internet fell 2.1% in seasonally adjusted terms in September from August. It was the fifth decline in six months.
We expect a range for today in AUDUSD rate of 0.9900 to 1.0060 (Yesterday we suggest to short the trade at 0.9980 ranges, the pair drop low at 0.9907)
Limit Short order at 1.0080
Stop loss at 1.0140
Target at 1.0030, 0.9970 and 0.9930
EURUSD: The European Central Bank may be sitting on a time bomb composed of risky euro zone debt, and inflation may be the best way to defuse it, according to a new Columbia Business School study.
Greece’s financial distress could be what ignites the explosion, leading to “cascading defaults and restructurings” across the 17-nation currency bloc that could even threaten the ECB’s solvency, according to David Beim, a finance professor at Columbia Business School and a Council on Foreign Relations member, who authored the paper.
Beim argues that its exposure to the euro zone’s most battered economies is precisely why the central bank has so ferociously resisted a Greek default.
We expect a range for today in EURUSD rate of 1.3570 to 1.3760 (Yesterday, we suggest to short EURUSD at 1.3690 and the pair drop low was 1.3565.
Short at 1.3640 ranges
Stop loss at 1.3690
Target at 1.3600, 1.3560 and 1.3510
USDJPY: U.S. regulators Tuesday moved closer to mandating heightened oversight and tougher capital standards for more financial institutions, the latest step toward determining which companies pose the greatest risk to the financial system.
The council would set a series of thresholds to determine if a company is a so-called systemically important financial institution: firms that have at least $50 billion in assets, and also cross one additional financial boundary, would come in for further evaluation.
In addition to the minimum asset requirement, companies trigger the second round of scrutiny if they have $30 billion in outstanding credit default swaps, $3.5 billion in derivative liabilities, $20 billion in outstanding loans borrowed and bonds issues, a 15 to 1 leverage ratio measured as assets to equity, or a 10% ratio of short-term debt to total assets.
The council in the first and second rounds measures nonbank financial companies using publicly available information. Nonbanks include hedge funds and private-equity firms, insurance companies, specialty lenders and broker-dealers.
We expect a range for today in USDJPY rate of 76.30 to 76.90 (We continued to hold the trade where we bought last at 76.60 ranges)
Entry at 76.60
Stop loss at 76.10
Target at 76.90, 77.20 and 77.60
