AUDUSD:The Australian dollar was lower late Monday struck by renewed global jitters linked to the impasse over U.S. debt ceiling talks and uncertainty surrounding moves to bolster Greece’s flagging finances.
As the currency slipped, government bond prices climbed as investors shifted to lower-risk assets, with the focus on an E.U. meeting Thursday to discuss further assistance for Greece.
Locally, investors will await the release Tuesday of the Reserve Bank of Australia’s July 19 policy meeting minutes. Most expect the central bank to continue signalling caution, highlighting a slower-than-expected recovery in the economy from the disasters at the start of the year.
The RBA left its cash rate on hold at 4.75% at the policy meeting, adding its earlier projections for economic growth will need to be revised lower.
We expect a range for today in AUDUSD rate of 1.0550 to 1.0650 (Yesterday, we set limit BUY order at 1.0540; the pair drop loss at 1.0550, look like we missing a trade. It currently hit our target bands. However, we reset Limit BUY order at 1.0560, stop loss at 1.0480, target at 1.0620-80)
EURUSD: Investors sold the euro Monday as concerns about the euro-zone debt crisis and risks for contagion to other member nations plagued the common currency.
Markets were also still digesting Friday’s European bank stress test results, which did little to boost confidence in the European banking system’s ability to withstand a sovereign default. Though only nine banks failed out of 90 top lenders, markets largely interpreted the tests’s parameters as not being strict enough
Italian and Spanish 10-year bond yields climbed higher Monday, with their spreads over German bunds reaching euro-era highs–highlighting market concerns about the risks of contagion to larger euro-zone economies. Investors await Thursday’s emergency summit of euro-zone policy makers, where they will discuss financing for debt-laden Greece and the region’s financial stability.
We expect a range for today in EURUSD rate of 1.4080 to 1.4150 (We continue to avoid the trade, however we set limit SELL order at 1.4220, stop loss at 1.4270, target at 1.4150 to 1.4080 ranges)
USDJPY: Meanwhile, the ongoing debate about raising the U.S. debt ceiling limit kept investors wary of the dollar as well.
A coalition of U.S. conservative and tea-party groups urged Republican leaders in a letter Monday to exclude changes to the tax code from the wrangling over the U.S. debt ceiling. To prevent “tax increases” from being included in any deal to raise the government’s $14.29 trillion borrowing limit. Organizations within the 29-group coalition include Grover Norquist’s Americans for Tax Reform; the National Taxpayers Union, an advocacy group that pushes for lower taxes; and the Small Business and Entrepreneurship Council, a small-business advocacy organization.
Changes to the tax code would be better examined in a “revenue-neutral” tax overhaul, the group recommended. Under what is known as a revenue-neutral plan, which is generally supported by Republicans, the top corporate- and individual-tax rates would be lowered by broadening the base of people and businesses who pay taxes and by eliminating some special-interest tax breaks.
We expect a range for today in UDSJPY rate of 78.50 to 79.50 (We set limit BUY order for USDJPY at 78.50, stop loss at 77.80, target upside 79.10 to 80.00 levels)
