AUDUSD: The Reserve Bank sanctioned a second successive interest rate reduction with a cut to 4.25% from 4.50% as it responded to expectations of weaker growth. The GDP data was close to expectations while the labour-market data was weaker as there was an employment decline of over 6,000 for November. There was still high degree of growing caution that the outcome of crucial euro-zone talks to resolve the region’s debt crisis will once again prove disappointing.
TheAustralian dollarwill continue to be subjected to high volatility and it will be difficult to sustain gains given the underlying trends in risk appetite.
We expect a range for today in AUDUSD rate of 1.0160 to 1.0295 (As mentioned last week that the pair was dipped back below 1.0100 between 1.0080 and 1.0000 ranges, and quickly recover during US market opening)
Set short position at above 1.0350
Stop loss at 1.0410
Target at 1.0280 and 1.0210
EURUSD: The European agreement to set up a new fiscal union clears the way for the European Central Bank to step up its role in solving the euro debt crisis
There will continue to be monitored very closely in the short-term amid serious fears that there could still be an underlying break-up in the currency area. There will also be fears surrounding the banking sector as funding difficulties continue.
Although the ECB has cut interest rates and boosted liquidity, there will be pressure for more aggressive action to provide support. The EU Summit will be extremely important for sentiment and there may be some initial relief, but there will still be an important underlying lack of confidence in the outlook.
We expect a range for today in EURUSD rate of 1.3300 to 1.3430
Set limit BUY order at 1.3280
Stop loss at 1.3210
Target at 1.3360, 1.3430
USDJPY: The Federal Reserve will also maintain a highly-expansionary monetary policy and is likely to indicate that there will be scope for further monetary support measures if required. International considerations will remain extremely important for the US currency and there will be demand for the dollar when risk appetite deteriorates sharply.
Safe-haven considerations will remain extremely important in the short-term and there will be underlying defensive support for the Japanese currency. There will be domestic pressure to weaken the yen, especially if there is a downturn in the regional economy and there will also be fears surrounding capital spending.
We expect a range for today in USDJPY rate of 77.30 to 77.90
Bought the pair at 77.30 (continued to hold)
Stop loss at 76.70
Target at 77.80, 78.20
