AUDUSD: The Australian dollar edged higher Monday as U.S. President Barack Obama confirmed a deal to raise the debt ceiling is in place, easing concerns of a possible credit downgrade or default.
Along with leading to a rallying currency, the news sent bond prices in Australia lower across the curve.
The currency was further lifted by a report showing China’s official Purchasing Managers Index fell to 50.7 in July from 50.9 in June, indicating that growth in manufacturing activity continued to slow as a result of Beijing’s tightening measures.
The RBA interest rate decision Today will, however, be one of the keys to (the Australian dollar’s) performance, with several analysts now calling for a tightening after last week’s stronger-than-expected (inflation) data. We expect the RBA to remain on hold, although to reaffirm its tightening bias.
We expect a range for today in AUDUSD rate of 1.0900 to 1.1070 (We set short the pair at 1.1070, stop loss at 1.1130, target at 1.0980, 1.0910 and 1.0840)
EURUSD: The euro rose in European trading Monday as the U.S. debt deal struck overnight gave investors a much-needed confidence boost, but lingering uncertainties kept the gains in check, sustaining demand for safe-haven currencies like the Swiss franc and yen.
The overall optimistic tone and reported buying by Asian central banks in thin dealing conditions helped the euro climb above $1.4450 against the dollar in spite of some soggy survey data.
Manufacturing purchasing managers’ indexes across Europe suggested the euro-zone economy got off to a weak start in the third quarter. The data showed that activity at euro-zone factories slowed to a near standstill in July, with even Germany recording slower growth than expected.
We expect a range for today in EURUSD rate of 1.4160 to 1.4330 (Yesterday we suggest the pair heading south, although the price we set to short was too high. We remain bearish, however it possible heading to 1.4320 before heading back down to 1.4160 areas.)
USDJPY: Spending on construction projects in the U.S. grew modestly in June, restrained by an ailing housing sector and weak economy.
The economy grew an anemic 1.3% in the second quarter as consumers pulled back and barely increased spending April through June. State and local governments, seized with budget troubles, decreased their outlays.
Investment in housing rose but the sector contributed only a tiny share to the economy’s paltry growth. The U.S. homeownership rate fell in the second quarter and could continue declining given the high number of foreclosures, bad economy, and uncertainty over home prices.
Monday’s data said spending on U.S. residential projects dropped 0.3% in June to $243.93 billion compared to the prior month.
We expect a range for today in USDJPY rate of 77.00 to 78.00 (Even though the market choppy overnight, but we remain the same view that the pair likely to heard further north.)
