AUDUSD: Australia’s manufacturing sector continued to contract in August, a performance gauge produced by an industry group published Thursday shows, with factory production choked by a strong Australian dollar, weak demand and cheaper competition from offshore.
The Australian Industry Group-PricewaterhouseCoopers Australian Performance of Manufacturing Index fell 0.1 points in August from July to 43.3, well below the 50 point level separating expansion from contraction.
Prime Minister Julia Gillard this week rebuffed calls form union leaders for an enquiry into the sector and instead promised quick action. Industry leaders like Ridout want the government to do more to cushion the fall-out of the country’s mining boom, which is helping to keep the Australian dollar elevated at the expense of the tourism, education and manufacturing industries.
We expect a range for today in AUDUSD rate of 1.0600 to 1.0700 (The pair continued to have resistance at 1.0710 and 1.0770 levels. We prefer to short the pair at 1.0770, with stop loss at 1.0830, target at 1.0700, 1.0660 and 1.0600. Those who wish to short the pair at 1.0710, should set stop loss at 1.0740, and target the same.)
EURUSD: EU is working hard to complete a second Greek bailout program on time. Alongside the International Monetary Fund and the European Central Bank, is currently reviewing Greece’s progress in implementing the financial assistance program. A team of experts is currently in Athens.
EU would move to complete its changes to financial regulation, including additional proposals aimed at “improving the oversight of markets in instruments such as derivatives; tightening rules on insider trader and market manipulation;” and presenting a framework for the resolution of failing banks.
We expect a range for today in EURUSD rate of 1.4300 to 1.4410 (The pair might have a little support at 1.4300 levels; fail to support will head to 1.4230 and 1.4140. We avoid the trade today.)
AUDUSD: An upbeat report on manufacturing was offset by a mildly disappointing number on the jobs market in a collection of data Wednesday that underscored the listlessness of the economy.
U.S. factory orders, driven by strong car and airplane demand, climbed in July more than expected. Yet an index on manufacturing in the Midwest for August declined to a 21-month low. And a national employment report showed private businesses in the U.S. added a modest number of jobs this month.
With the recovery two years old, the economy has slowed sharply, posting weak growth in the second quarter despite strong action by the Federal Reserve to spur the economy. Policymakers decided at their latest meeting to keep interest rates very low until mid-2013. But, according to records released this week, some of them favored even bolder stimulus.
We expect a range for today in USDJPY rate of 76.40 to 77.10 (We set limit to buy at 76.40, stop loss at 75.80, target at 76.80 to 77.10.)
