AUDUSD: The Australian dollar was higher late Monday despite increasing pressure on the country’s central bank to deliver a bigger-than-expected cut to interest rates Tuesday as signs of a domestic housing slump dented the economic outlook.
New home sales fell to their lowest level in over a decade in March, according to a survey by Australia’s top 100 builders, prompting industry calls for the Reserve Bank of Australia to cut its cash rate by 50 basis points, not the more typical 25 basis point easing forecast by most economists.
Financial markets are pricing in around a 30% chance the central bank will deliver a bigger-than-expected cut to its cash rate, which currently stands at 4.25%. Its rates decision is due at 0430 GMT Tuesday.
We expect a range for today in AUDUSD rate of 1.0350 to 1.0460
We SELL AUDUSD at 1.0440 (continued to hold our Short position)
Stop loss at 1.0480
Target at 1.03500 and 1.0280
EURUSD: Romania’s currency tumbled to an all-time low against the euro on political concerns Monday, while other emerging-market currencies slipped in line with downbeat market sentiment.
Euro-zone structural fears will remain an important short-term focus as underlying tensions persist. There will be continuing fears that restrictive fiscal policies will intensify recession conditions in peripheral economies and exacerbate bad loans within the banking sector. There will be strong pressure for further ECB support and there will also be growing political pressure for a shift in underlying policies towards a more growth-orientated strategy.
We expect a range for today in EURUSD rate of 1.3180 to 1.3280
STAND ASIDE
USDJPY: The Federal Reserve stance will continue to limit the scope for near-term dollar support with expectations that interest rates will remain at very low levels throughout the next two years. There will also be expectations that the Fed will respond to any fresh downturn with fresh quantitative easing.
There should still be expectations that the US economy will out-perform in the short-term, especially with persistent Euro-zone fears. Growth expectations should also provide some net support to capital inflows. The dollar will still find it difficult to gain strong support unless there is a serious deterioration in global risk appetite.
We expect a range for today in USDJPY rate of 80.00 to 80.70 (Note: If the pair fall below 80.00 ranges, will add additional trade.)
We BUY USDJPY at 80.30 (continued to hold)
Stop loss at 79.60
Target at 80.70-90
