AUDUSD: The Australian dollar was sharply lower late Wednesday and traders predict it is headed for parity with its U.S. counterpart if the political impasse in Greece doesn’t get resolved.
Treasurer Wayne Swan said that a plan to move the government’s budget balance from a deficit of A$44.4 billion in the fiscal year ending June 30, to a surplus of A$1.5 billion in the next year, boosts the scope for the country’s central bank to cut interest rates to fan a slowing economy.
The Reserve Bank of Australia has already begun cutting interest rates amid signs a once-in-a-century mining boom underpinning the economy is losing momentum. Last week, it slashed the cash-rate target by 50 basis points to 3.75% to help tackle a slowdown that’s particularly hurting non-mining sectors of the economy hit by a strong Australian dollar.
We expect a range for today in AUDUSD rate of 1.000 to 1.0100 (We expect the pair to head north toward 1.0100 and 1.0160 after losing straight more than 400 pips)
STAND ASIDE
EURUSD: Inconclusive weekend elections in Greece are being seen by some as a possible beginning of the end for Greece’s membership in the common European currency. If Greece is unable to form a government it faces another election in June. At stake is Greece’s ability to implement agreed budget cuts and overhauls it must take in order to secure continued financing from its European partners and the International Monetary Fund.
Greece is due to receive the next bailout payment Thursday, part of a previously approved disbursement from the deal sealed in March.
We expect a range for today in EURUSD rate of 1.2890 TO 1.3130 (If the pair manage to break through 1.2960, then it likely to move up north otherwise will likely to drive further south toward 1.2840-60 ranges)
STAND ASIDE
USDJPY: The Federal Reserve on Monday will offer $3 billion in 28-day term deposits, effectively a test of an exit program the central bank could one day use on a larger scale to drain money from the financial system.
The central bank said in a release that the loans are being made through a program intended to help banks familiarize themselves with the Fed’s term deposit options. The program, called the Term Deposit Facility, is one of many options the Fed has to help manage the reserves held by banks. A rise in term deposits can help reduce the size of reserve balances from the financial system.
We expect a range for today in USDJPY rate of 79.30 to 80.10
STAND ASIDE
