AUDUSD: The Australian dollar edged slightly off a 30-year high Thursday as traders in Asia increased bets that Australia’s central bank would hike rates in the coming months but worried about the debt issues still facing other regions.
For foreign exchange markets, resurgent doubts about the Greek bailout and little positive sentiment about the U.S. debt impasse weighed on the currencies of both regions. For the Australian dollar, the developments were both a help — lifting the Australian dollar to its highest level in 30 years at one point — and a hindrance, with risk concerns keeping some of the gains in check.
At 0620 GMT, the Australian dollar was at US$1.1037, down slightly from US$1.1051 late Wednesday and a 30-year high of US$1.1081 hit during mid-day trading in London. The push to a new high had been on hold for the past three months but resumed in the past two weeks as the U.S. debt ceiling debate deteriorated.
Some members of the (Reserve Bank of Australia) board may well not want to hike in August. But with the RBA’s persistent focus on inflation, and the forward-looking nature of monetary policy, a small move now will likely be the RBA’s preferred action
We expect a range for today in AUDUSD rate of 1.0950 to 1.1050 (As mentioned earlier the pair likely to head south. If you holding short position need to trial stop loss to 1.1050-70 ranges and target further. We expect the market to be volatile)
EURJPY: Euro/yen options rose Thursday in Asia as concerns about Europe’s sovereign debt problems reemerged after Germany signaled that its support for a euro-zone sovereign bailout fund was limited.
The European Central Bank said earlier Thursday that euro-zone banks tightened their credit standards in the second quarter and they expect to set even tougher requirements in the months ahead amid growing perceptions of economic weakness and risk.
As well, markets were reminded that even though Greece had been given some breathing room by a proposed EUR109 billion rescue package, the bailout doesn’t guarantee the solvency or sustainability of its debt, or the government’s ability to move forward with reforms.
Ratings agency Standard & Poor’s downgraded Greece one notch Wednesday and placed a negative outlook on the country.
We expect a range for today in EURUSD rate of 1.4220 to 1.4410 (The pair hit low yesterday 1.4252; we expect the pair to hit further south at 1.4280 when the pair was 1.4330 ranges. There might be a little resistance at 1.4400 areas. We avoid trading the pair today)
USDJPY: The U.S. Treasury awarded $35.00 billion in five-year notes at Wednesday’s auction at a high rate of 1.580%. The Treasury received bids totaling $91.84 billion and accepted $35.00 billion. Primary dealers were awarded $17.03 billion, while indirect bidders–a category that includes foreign central bankers–were awarded $12.78 billion.
Indirect bidders got 36.6% of the total; direct bidders received 14.6%. The dollar price was 99.617012 and the coupon rate was set at 1.50% or 1 1/2%. The bid-to-cover ration, an indication of demand, was 2.62. Tenders submitted at the high yield were allotted 48.79%.
The median rate was 1.516%; that is, 50% of the amounts of accepted competitive bids were tendered at or below that rate. Of the competitive bids accepted, 5% were tendered at or below the rate of 1.400%. The Federal Reserve purchased $1.04 billion in five-year notes for its own account. The bills awarded to the Fed are in addition to the public offering amount.
We expect a range for today in USDJPY rate of 77.50 to 78.00 (We have to wait and see what happen to Aug.2, however we expect the pair to hit north in coming week, expect to reach 79.00 or possible 80.00 after the debt ceiling plan is succeed.)
