AUDUSD: The Australian dollar tumbled Friday amid a mix of concerning U.S. economic data and escalating worries about European banks’ access to funding. Coupled together, the developments weighed on all risk-sensitive assets like the Australian dollar, and fueled another run higher on both ends of Australia’s bond curve.
The move in Asia came in the wake of a more than 400 point decline for the Dow Jones Industrial Average on Thursday, with Asian shares sharply lower Friday on the renewed concerns about the global economy.
As for Australian fixed income, both long-end and short-end government bonds continued to benefit from the global rush to safety. As the government’s debt gets touted as a new safe-haven asset, the three-year and 10-year bond futures contracts have both added more than 60 basis points since the end of the second quarter.
Among the few government entities locally not benefiting from the push is coal-rich Queensland, even though it accounts for around 25% of the national economy. Hurting Queensland is that it’s the only Australian state not rated triple-A, while it continues to recover following a series of devastating floods earlier this year.
We expect a range for today in AUDUSD rate of 1.0320 to 1.0420 (We set limit BUY order at 1.0320, stop loss at 1.0260, target upside at 1.0420 and 1.0460)
EURUSD: Greece called on European Union leaders Sunday to step in and resolve growing dissension among euro-zone members angered by a special deal under which Finland would receive collateral in exchange for extending new loans to Greece.
The deal, which was announced last week, has complicated Greece’s hopes for a fresh bailout. While it has also become another bone of contention in Europe’s increasingly frantic efforts to stop the debt crisis from engulfing more members of the currency bloc.
Under its terms, Greece will deposit about EUR500 million in an escrow account with the Finnish state, as a precondition for Finland to release funds to the European Financial Stability Facility, Europe’s temporary bailout fund, which is being used to finance fresh aid for Greece.
Last month, European leaders agreed on a fresh EUR109 billion assistance package for Greece, as well as a series of other measures aimed at stopping the Greek debt crisis from spreading to other euro-zone countries.
We expect a range for today in EURUSD rate of 1.4300 to 1.400 (We avoid trading the pair today, although the pair might have little support at 1.4280-1.4300, break those support will heading further down toward 1.4240 and 1.4180)
USDJPY: The Japanese government is speeding up the compilation of emergency economic measures in the face of the yen’s persistent strength, as highlighted by its rise to a postwar high against the U.S. dollar on Friday
The government had planned to include measures to cope with the strong yen in the third extra budget for fiscal 2011. But it is now considering bringing forward their implementation to September by using reserve funds from the principal budget for the current fiscal year
Japan intervened in the currency market earlier this month to stem the yen’s rise, which hurts Japan’s export-oriented economy.
In addition to the intervention, the government has now resolved to approve other measures soon, such as providing low-interest loans to mid- and small-sized companies to support employment, promote the spread of energy-saving technology and to prevent the hollowing out of industries
We expect a range for today in USDJPY rate of 76.30 to 77.20 (Last week, those who bought the trade at 76.60 ranges, bring stop loss to 76.40 from 76.00 target remain at 76.90 and 77.20)
