AUDUSD: The Australian dollar leapt higher for the second-straight day Thursday, boosted in part by possible moves from the International Monetary Fund to stem the Euro zone’s debt crisis.
As the focus in markets remained on Greece, the head of the IMF’s Europe department said the fund could create a special financing tool to buy bonds in private markets. The report comes as Germany stepped up pressure on other euro-zone governments to declare how they would recapitalize their banks if the need arose.
Coupled together, the developments helped stocks surge in the U.S., with a subsequent follow-through move in Asia that had commodity-linked currencies like the Australian dollar finding buyers.
We expect a range for today in AUDUSD rate of 0.9680 to 0.9760 (If you are in the long position, we suggest to reduce the volume. As mentioned for last two days AUDUSD will likely hit 0.9700 levels when it was 0.9400 areas, although we might find little resistance at 0.9760-80 areas.
Set limit SHORT order for AUDUSD at 0.9780
Stop loss at 0.9830
Target at 0.9730 and 0.9660 AND 0.9600
EURUSD: A full-fledged political union might be needed for the euro zone to sustain its common currency and overcome divisions that sometimes reward less-responsible members, former U.S. Federal Reserve chairman Alan Greenspan said.
In an opinion essay published online by the Financial Times late Thursday, Greenspan took aim at the “failed” Stability and Growth Pact — a mechanism by which euro states are supposed to balance risk by ensuring no one member’s debt grows too large. To constrain “aberrant behavior” by some in the 17-member zone, he added, a stronger bond might be need.
The future of the euro beyond a select group of northern countries with a similar culture will depend on the ability of all euro zone nations to follow suit” by achieving higher rates of personal saving and lower inflation.
We expect a range for today in EURUSD rate of 1.3370 to 1.3500 (Yesterday we set a shorted trade at 1.3390, the pair drop low toward 1.3245, hit both target band at 1.3330 and 1.3270. We expect a little resistance at 1.3330 ranges)
SHORT EURUSD at 1.3430 ranges
Stop loss at 1.3470
Target at 1.3390, 1.3330 and 1.3280
USDJPY: The U.S. Federal Reserve’s balance sheet expanded modestly in the latest week, after the central bank said it would roll out a new plan to stimulate the weak economy. The Fed’s asset holdings in the week ended Oct. 5 stood at $2.863 trillion, up from the $2.854 trillion reported a week earlier, the central bank said in a weekly report Thursday.
Holdings of U.S. Treasury securities rose to $1.672 trillion Wednesday, from $1.665 trillion the week before. Its holdings of mortgage-backed securities and federal agency debt securities were unchanged. The Fed’s portfolio has more than doubled since the financial crisis of 2008 and 2009 as the central bank bought mortgage and government bonds to keep interest rates very low and stimulate the economy.
After its last policy-setting meeting Sept. 21, the Fed said it will sell $400 billion of its U.S. Treasury securities maturing in the next three years and replace them with longer-term bonds maturing in six to 30 years. The program is meant to drive down long-term interest rates to make borrowing cheaper. The Fed also announced plans to halt the shrinkage of mortgage securities from its balance sheet, a move directed at helping the housing sector.
We expect a range for today in USDJPY rate of 76.50 to 76.90 (We continued to hold our trade when we last bought at 76.60.)
Entry at market price for USDJPY at 76.60 ranges
Stop loss at 76.10
Target at 76.90, 77.20, 77.60 AND possible heading to 80.00
