AUDUSD: The Australian dollar was higher late Tuesday supported by signals from the central bank that it has no plans to cut interest rates again soon.
In minutes of its July 3 policy meeting, the Reserve Bank of Australia said there was “no need” to cut interest rates, citing stronger economic growth, and the fact that rates were reduced in May and June.
Financial markets immediately lowered expectations of a cut in interest rates in August. Still, the RBA stopped short of signalling an end to the current cycle of rate cuts. With the world economy weak, it remains appropriate to have interest rates at below average levels
We expect a range for today in AUDUSD rate of 1.0260 to 1.0325
We SELL AUDUSD at 1.0310 (continued to hold our short position)
Stop loss at 1.0360
Target at 1.0280 and 1.0220
EURUSD: The Eurosystem’s balance sheet increased 14.64 billion euros ($17.98 billion), or 0.5%, in the week ending July 13, compared with the previous Friday, settling at EUR3.1 trillion.
The increase means the balance sheet is about 58% larger than it was a year ago. It also pushes the balance sheet to its second highest level ever, after the week ending June 29, when it reached EUR3.102 trillion.
The increase came amid higher demand for the ECB’s 28-day loan last week. Banks tapped that longer term refinancing operation for EUR24.4 billion, up from EUR18.9 billion at the previous such operation.
We expect a range for today in EURUSD rate of 1.2215 to 1.2300
We SELL EURUSD at 1.2285
Stop loss at 1.2315
Target at 1.2215 and 1.2165
USDJPY: If the economy’s performance worsens, the Federal Reserve may have to take additional action to get growth and hiring back on track, a central bank official said Tuesday. If recent weak economic data persist and cause my outlook for economic growth and inflation to become weaker than I currently anticipate, additional policy actions could be warranted.
Bernanke’s remarks were downbeat. But he refrained from giving substantial clues about the outlook. While the increasingly difficult circumstances the economy finds itself in are leading many in markets to expect the Fed to provide new monetary policy at some point
We expect a range for today in USDJPY rate of 78.80 and 79.40
We BUY USDJPY at 78.80
Stop loss at 78.60 (We trial our stop loss from 78.20)
Target at 79.40 to 79.80
