AUDUSD: The Australian dollar was lower late Monday as U.S. talks to resolve an impasse over raising the country’s debt limit dragged into another week, heightening fears nothing will be achieved ahead of an Aug. 2 deadline to avoid a default.
Economic growth in Australia will pick up this fiscal year, but it will be narrowly based on capital expenditure and will need to overcome misfiring in some of the normal growth engines.
Capital spending including that of the public sector will account for almost all of Australia’s economic growth this fiscal year, with private spending alone accounting for two-thirds driven by mining and resource companies wanting to add capacity.
Yet the pressures on the industrial landscape of the two-speed economy are intensifying, fueled in part by the “stellar strength” of the currency, though this has been partially masked by the striking but ultimately temporary impact of floods and cyclones in reducing mining output and exports.
We expect a range for today in AUDUSD rate of 1.0780 to 1.0880 (We have been holding our short position since last Friday. The pair went down toward 1.0794 and move back did not hit our target. We continued to hold on the pair and keep remain stop loss at 1.0920, target between range 1.0780-1.0720)
EURUSD: Private-sector participation in a new Greek financing package is contingent on the International Monetary Fund increasing its funding for the beleaguered nation, the head of a international banking group said Monday.
But Charles Dallara, head of the Institute of International Finance, indicated that the IMF had promised it would expand its loan program. Dallara’s IIF is a trade group that represents the world’s leading banks and is spearheading talks with Greece.
The decision on additional IMF funding is ultimately decided by the executive board that represents shareholder countries. IMF chief Christine Lagarde said last week, however, that based on the deal for a new, nearly EUR110 billion financing package, “the IMF will continue to play its part.”
Last week, European Union leaders agreed to a new EUR109 billion assistance program for Greece to cover its financing needs for the next several years and that foresees the country’s private-sector creditors exchanging their current holdings of Greek government bonds for new, long-term debt over the next few months.
We expect a range for today in EURUSD rate of 1.4320 TO 1.4440 (We refer to stay out of the market today, it might look like the pair lost it strength for further uptrend, the pair currently at 1.4380, if you do short at this level, stop loss at 1.4420, target between 1.4320 to 1.4260)
USDJPY: U.S. Republicans and Democrats were reported to be working on separate debt plans in Washington, dashing expectations that built up over the weekend that a deal would be struck before the opening of Asian markets Monday.
Much is on the line with ratings agencies warning that failure to resolve the differences between leaders in Washington could see the U.S. stripped of its top shelf credit rating.
The Dollar declined against most currencies after US lawmakers failed to agree on raising the nation’s $14.3 Trillion debt ceiling, boosting speculation of a default as soon as next week when the deadline of August 2 nears. The franc and yen rose against most of their major peers as Republicans prepared to force action on a shorter-term extension of the debt limit than President Obama has requested, spurring demand for the currencies as havens. Gains in the yen were limited on speculation Japan will intervene in markets to stop its appreciation.
We expect a range for today in USDJPY rate of 78.00 to 78.80 (Investors currently less interest in holding USDJPY due to US debt ceiling and Japan weakness growth. We continue to hold the pair long at 78.50, stop loss at 77.80, target at 79.10 and 80.00)
