AUDUSD: The Australian dollar was subjected to heavy selling pressure and dipped to test support below 1.02 against the dollar before staging a recovery back towards 1.04. There was a sharp deterioration in risk appetite and the currency was also undermined by a weakening trend for Asian currencies as a whole as growth fears increased.
Domestically, there was a weaker than expected reading for housing starts which reinforced fears that the economy was heading for a sharp slowdown and there was renewed speculation that the Reserve Bank would have to loosen policy within the next few months.
Australian dollar volatility is likely to remain higher in the short-term and it will be difficult o secure much of a recovery given the international and domestic risk profile.
Domestically, there was a weaker than expected reading for housing starts which reinforced fears that the economy was heading for a sharp slowdown and there was renewed speculation that the Reserve Bank would have to loosen policy within the next few months.
Australian dollar volatility is likely to remain higher in the short-term and it will be difficult o secure much of a recovery given the international and domestic risk profile.
We expect a range for today in AUDUSD rate of 1.0180 to 1.0330 (We expect to see further FALL for the AUDUSD, we set limit buy order at 1.0185, stop loss at 1.0120, target at 1.0235, 1.0280 and 1.0360.)
EURUSD: The Euro-zone outlook remains extremely precarious as sovereign-debt issues continue to intensify. The Greek economy remains in freefall and there remains an extremely high risk of debt default and Euro exit, potentially very quickly. With growth conditions deteriorating, there will be fears that debt profiles in Italy and Spain will also continue to deteriorate, exposing them to a further contagion risk. There will be further fears over the banking sector and political divisions surrounding key issues such as Eurobonds will continue. The Euro will gain relief at times, but will find it very difficult to gain sustained support, especially as sovereign buying from Asia is liable to be lower.
Analysts and rating agencies, such as Moody's, have recently said the Greek government debt is unsustainable and the probability of a haircut--a reduction of the principal owed to someone--for Greek bondholders is increasing. European Governments and Central Bank's Officials have dismissed this possibility.
We expect a range for today in EURUSD rate of 1.3480 to 1.3730 (We continued to expect the pair heading further back toward 1.3500 regions. We set limit BUY order at 1.3480, stop loss at 1.3420, target at 1.3540, 1.3590 and 1.3660)
USDJPY: Speculative investors had bigger bets on a stronger dollar than a weaker one for the first time in more than a year in the latest government data, the latest sign that the U.S. currency is regaining its status as a top safe haven from global economic turmoil.
Speculators held an $828.9 million long position in the dollar against a basket of other major currencies on Sept. 13, according to the Commodity Futures Trading Commission's weekly report on trader positions, released Friday. It was the first time since July 6, 2010, that traders were more heavily invested in a strengthening U.S. currency.
Traders held a $17.7 billion net short position as recently as Aug. 23. A short position means a trader is betting on a currency to fall, while the long position indicates a bet a currency will climb.
We expect a range for today in USDJPY rate of 76.70 to 77.20 (Last week, we re-entry long the pair at 77.70 ranges, we continue to hold our trade with target at 77.20 to 77.60)
