AUDUSD: The Australian dollar was lower late Friday, as two of world’s biggest foreign-exchange dealing houses lowered their outlook for the local currency, blaming slower economic data and a weakening demand for Australian debt.
Goldman Sachs now expects the Australian dollar to return to parity against the greenback in coming months before slipping to US$0.9800 six months out and settling there. The U.S. investment bank had been forecasting the commodity currency to stay at US$1.0800 over the period.
Goldman said portfolio reallocation to Australian sovereign debt from foreign central banks, sovereign wealth funds, insurance companies and real money managers following the shrinkage in the pool of AAA-rated government securities is more of a “once-off realignment” than a source of ongoing buying pressure. The house expects that pressure to dissipate through 2012.
We expect a range for today in AUDUSD rate of 0.9950 to 1.0050
We set BUY for AUDUSD at 0.9930
Stop loss at 0.9870
Target at 0.9980 and 1.0030
EURUSD: Speculators piled up the largest net gamble against the euro’s rise since February as of Tuesday, totaling $23.4 billion, government data showed Friday.
Traders held a net 143,984 contracts betting the euro will fall against the dollar, according to the Commodity Futures Trading Commission’s weekly report on the commitments of traders. That bet was 32% larger than in the previous week.
Earlier this week, the euro broke through the $1.30 barrier to trade below that level as investors returned to worrying about the euro zone’s sovereign-debt crisis.
We expect a range for today in EURUSD rate of 1.2830 to 1.2930
We set BUY for EURUSD at 1.2810
Stop loss at 1.2760
Target at 1.2880 and 1.2930
USDJPY: The recent economic data releases have generally been slightly weaker than expected and there will be concerns surrounding an underlying slowdown. International considerations will be extremely important in the short-term and there is scope for dollar demand on defensive grounds, especially as there will be a lack of confidence in the global growth outlook. Global intervention policies will also tend to support the US currency as reserve diversification away from the dollar will decline. There will be speculation that the Federal Reserve will sanction additional quantitative easing if demand falters and this will be important in curbing dollar demand on yield grounds.
There will be little confidence in the Japanese economy with expectations that growth conditions will remain extremely difficult. The Bank of Japan will remain an important focus with pressure for further action to boost the economy There will also be important political pressure from the Finance Ministry for yen gains to be resisted.
We expect a range for today in USDJPY rate of 79.60 to 80.30
STAND ASIDE
