AUDUSD:Â In a sign that Australia’s mining boom won’t protect the nation’s banks from global economic turmoil, the credit default swaps for the nation’s four largest lenders have climbed nearly 50% since the end of July as investors have grown increasingly worried about European sovereign debt and the health of the U.S. economy.
That means it now costs US$185,000 a year to insure US$10 million of bonds for five years. That level is up 48% from US$125,000 at the end of July, before Standard & Poor’s removed the U.S.’s triple-A rating, sending global markets into a tailspin.
Renewed volatility in the markets could push up Australian bank funding costs, yet another for challenge for the banks at a time when domestic borrowing is subdued.
We expect a range for today in AUDUSD rate of 1.0415 to 1.0570 (We set to short the pair at 1.0570, stop los at 1.0630, target at 1.0530, 1.0490 and 1.0450. Note: there might be a little resistant at 1.0510. If you place a short at those level, place stop loss at 1.0540, and target at 1.0490 and 1.0450.)
EURUSD:Â Recent rescue efforts for Greece don’t undermine the principles of a market economy, however, Schaeuble said, as the country has to fulfill strict austerity criteria in exchange for aid.
A fresh EUR109 billion aid package for Greece has been criticized by academics and even some government lawmakers in Germany as useless and counter-productive, as the troubled country is seen incapable of getting out of its debt trap without a real default on its debt.
Euro-zone governments at the summit had agreed to allow the EFSF to buy sovereign bonds directly in the secondary market, and earlier had decided to boost the fund’s effective lending capacity to EUR440 billion from EUR250 billion previously.
We expect a range for today in EURUSD rate of 1.4430 to 1.4470 (We set to short a pair at 1.4470, stop loss at 1.4530, target at 1.4420 and 1.4360.)
USDJPY:Â A 15-day strike at Verizon Communications Inc. (VZ) fueled an unexpected gain in new jobless benefit claims last week, though the market still looks weak even after stripping out effects of the labor dispute.
Initial jobless claims rose by 5,000 to a seasonally adjusted 417,000 in the week ended Aug. 20, the Labor Department said Thursday. Claims filed in the previous week were revised up to 412,000 from an originally reported 408,000.
Local stocks fell 2.1%, affected by declines in U.S. equities, and government bonds saw some selling pressure, pushing yields up modestly after a big rise the previous session. The yield on benchmark 10-year bonds rose five basis points to 6.15%, and the yield on bonds due 2029 rose four basis points to 7.00%.
We expect a range for today in USDJPY rate of 76.80 to 77.60 (We currently shorting the trade at the market price 77.30, stop loss at 77.90, target at 76.90 and 76.60.)
