AUDUSD: Australia is likely to cut debt issuance to about A$30 billion in 2012 from just above A$50 billion in 2011. The pullback will come as Australia returns to a surplus, which will help its debt-to-GDP ratio slowly drop in the coming years from a current level of about 15%.
Reducing the debt too far could be problematic for the country’s banks, which are forced to hold certain levels of public debt. Too little issuance of debt could hurt liquidity in the market.
Australia is in the enviable position of already having an ultra-low debt-to-GDP ratio, which is likely to shrink even further. The country’s finances stand in stark contrast to European nations grappling with runaway debt like Greece, which has a debt-to-GDP level near 150%, according to the International Monetary Fund. Australia’s is even much stronger than the U.S., which is around 70%.
We expect a range for today in GBPUSD rate of 1.0000 to 1.0160 (The pair hit our stop loss during US market close.)
We set to RE-ENTRY the pair at 1.0070 ranges
Stop loss at 1.0015
Target at 1.0120, 1.0180 and 1.0250 and possible 1.0350.
EURUSD: Finance ministers and central bankers will gather in Washington this week for the International Monetary Fund’s annual meeting and conference of the Group of 20 industrialized and developing nations. Europe’s debt crisis is threatening to push advanced economies into another recession and spark a second global financial crisis. Officials will urge Europe to act more swiftly and decisively than it has so far, fearing the risks to their economies.
In particular, the euro zone should ensure its EUR500 billion bailout facilities has the capacity to douse the sovereign debt wildfire. Treasury points to the U.S. response to the 2008 crisis as a potential model for the bailout facility in Europe. One option is to use the European Financial Stability Facility, or EFSF, as collateral for its central bank, leveraging far more bailout firepower.
We expect a range for today in EURUSD rate of 1.3550 to 1.3675 (Yesterday, we set to buy the pair at 1.3560, the pair drop low was 1.3562.)
We continued to set our limit buy at 1.3560
Stop loss at 1.3480
Target at 1.3660, 1.3690 and 1.3750
USDJPY: U.S. policy makers must accept that the country is likely caught in a liquidity trap and avoid taking steps that could exacerbate the situation, such as immediate sharp cuts to government spending. U.S. economy, where unemployment remains above 9% and the housing sector continues to serve as a drag on the tepid recovery
Much of the focus in the U.S. over the last year has been on how to reduce the country’s long-term deficits and get on a more sustainable fiscal path. Some in Congress, primarily Republicans, have said the government should immediately cut federal spending as a way to reduce the deficit.
It’s appropriate for the U.S. to consider its long-term fiscal trajectory when making policy for the short-run, but said immediate cuts to spending could actually make the economic situation worse.
We expect a range for today in USDJPY rate of 76.30 to 76.90 (Yesterday we entry the trade at 76.45.)
We continuing holding our trade where we bought last at 76.45
Stop loss at 75.80
Target at 76.85, 77.15
