AUDUSD: The Australian dollar was weaker Friday as investors reacted to news of further delays in Washington hampering a successful resolution to the U.S. debt ceiling debate ahead of Tuesday’s deadline.
Weakness in the Australian dollar Friday was also attributed to the fact that it has rallied strongly over recent weeks, and some pull back was overdue.
All eyes are also on the Reserve Bank of Australia which some economists expect will announce an interest rate increase at policy meeting Tuesday. The cash rate is 4.75% and hasn’t been changed since November. Inflation concerns have recently ramped higher, bring the hike onto the radar.
We expect a range for today in AUDUSD rate of 1.0970 to 1.1080 (As mentioned last week that the pair likely hit further south. The pair falls toward 1.0900 from high 1.1040 ranges. We remain careful with the US voting later on)
EURUSD: International Monetary Fund say there could be a general need to boost fund resources in the coming years by around $350 billion to $400 billion. The $350 billion to $400 billion figure was based on projected reserve demand for most of the world’s emerging and developing nations most likely to face difficulties, excluding China and major energy exporters, of up to $1.6 trillion in the next five years.
Leaders of the Group of 20 largest industrialized and developing nations are still negotiating on how to restructure the international monetary system, including the role of the IMF’s lending unit.
First, one of the principal motivations for G-20 talks on restructuring the international monetary system is to try to encourage China to decrease the size of its $3 trillion in foreign-exchange reserves. If the IMF were to take a greater role to offset the need for China’s reserves, the estimate would need to take into account potential demand from Beijing.
We expect a range for today in EURUSD rate of 1.4290 to 1.4460 (We would prefer to short the pair rather than Long position, so we set a short trade at 1.4500-30, stop loss at 1.4580, target down toward 1.4415, 1.4345 and possible 1.4160. Since China start to taken off their reserve due to unfair trade.)
USDJPY: A leader of a moderate group of House Democrats said most of the group’s members would likely support a final deal to raise the country’s $14.29 trillion debt ceiling and cut deficits by up to $3 trillion over the next decade.
Under the emerging compromise, a committee of 12 lawmakers would be appointed to make recommendations on longer-term deficit reduction measures. Each party leader in both chambers would appoint three members to the panel. They would have to report back by Thanksgiving and if a majority on the committee agrees, then both the House and Senate would hold an up-or-down vote on the findings.
We expect a range for today in USDJPY rate of 77.00 to 78.00 (We still remain the same view as the USD will move strong against the yen in coming sessions.)
