Private sector borrowing has slumped, retail spending is well below normal, home prices are falling, construction and services sectors are weak and manufacturing is contracting at a faster pace.
AUDUSD: The Australian dollar was stronger late Tuesday, having reached its highest levels in nearly a month as traders continued to respond to stronger economic data in the U.S. and gains in global shares this week.
The improving sentiment fanned speculation of further gains for the currency, with some analysts beginning to forecast moves that would put it within reach of the 30-year highs above US$1.10 it touched in late July.
If U.S. economic data continues to improve then local market pricing for interest rate cuts by the Reserve Bank of Australia will quickly evaporate. At the same time, if U.S. economic data sours, the Australian dollar will benefit from a weaker U.S. dollar
We expect a range for today in AUDUSD rate of 1.0600 to 1.0730 (We would prefer to stay of the market range today. However, we will go short if the pair hit at 1.0760, stop loss at 1.0820, target downside 1.0700, 1.0660 and 1.0600.)
EURUSD: The head of Poland’s central bank said Tuesday that the longer the euro-zone countries take to resolve the sovereign-debt crisis, the more likely it is that the bloc will have to issue euro-zone bonds, or bonds backed collectively by all the members of the single-currency union.
The euro zone is considering providing donor members including Finland with collateral in the form of Greek banking shares to secure the next aid package for Athens. Of the EUR109 billion expected to make up the euro zone’s second rescue package for Greece, at least EUR20 billion is earmarked for Greek banks.
In return for getting the aid, Greek banks will be partially nationalized, the article quotes unnamed sources in Brussels as saying. The Greek government would provide donor countries in the euro zone with the nationalized equity stake as collateral.
We expect a range for today in EURUSD rate of 1.4360 to 1.4500 (Yesterday, we have successfully booked over 90 pips profit for the pair when we sold 1.4490 ranges and the pair drop low at 1.4385. We now set an entry to buy at 1.4310, stop loss at 1.4260, target at 1.4360, 1.4410.)
USDJPY: As President Barack Obama prepares to pitch a new jobs plan to Congress, he said Tuesday there are steps the government can take that could add up to a million jobs to the U.S. economy and boost growth by 1.5%.
The remarks represent President Obama’s most specific comments about the type of growth he sees the government creating, although over what time frame is unclear. They come just a week before he is scheduled to provide Congress with a series of ideas to boost the number of jobs and reduce the nation’s deficit.
An administration official said Obama wasn’t referring to his jobs plan, but was speaking more generally about growing the economy and impacting job growth. While adding 1 million jobs may not seem like much when 14 million people are unemployed, the economy added about 117,000 jobs in July.
It’s unclear exactly what new ideas President Obama will provide to Congress and whether his plan will estimate the number of jobs it could create. The president has already pressed Congress to boost infrastructure spending, extend a payroll-tax cut and tax credits for employers to spur hiring.
We expect a range for today in AUDUSD rate of 76.30 to 77.10 (tHe pair has been side way since August 10. We set limit buy order at 76.30, stop loss at 75.70, target at 76.80 and 77.20.)
