AUDUSD: The Australian dollar was higher late in Asia on Thursday on the back of better-than-expected U.S. manufacturing data, heading into an offshore session packed with event risk.
The local currency weakened a little after the Australian Bureau of Statistics reported the seasonally adjusted balance on trade in goods and services narrowed to a surplus of A$1.89 billion in July from A$3.44 billion in June. Economists had expected a July surplus of A$3.1 billion.
Long AUD/USD was recommended on strong Australian July retail sales and building approvals data as well as narrower-than-expected Australian 2Q current account deficit.
Also, daily chart was supportive of long AUD/USD positions at trade entry as spot had broken above downtrend line from Aug 6 high of 0.9221, bullish parabolic stop-and-reverse signal was hit at 0.8946 on Friday, stochastic measure was rising from oversold, while negative MACD histogram bars were contracting, pointing to increasing upside risks for AUD/USD.
We expect a range for today in AUDUSD rate of 0.9000 to 0.9170 (Short at 0.9170, stop loss at 0.9220, target OPEN)
EURUSD: The euro lost earlier gains Thursday as the recent improvement in global risk sentiment proved short-lived.
However, the single currency did find some support at mid-morning from a successful auction of five-year bonds by Spain, further easing concerns about the euro zone's sovereign debt problems.
A further decline in U.K. house prices, concern that the European Central Bank will prove more dovish than expected after its policy meeting later Thursday and speculation about Friday's non-farm payrolls in the U.S. have all helped to inject caution in trading among major currencies.
In the U.K., Nationwide reported that house prices fell by 0.9% last month, following a 0.5% fall in July. This will only contribute to fears that the U.K. economy is about to slow even further as a big fiscal squeeze gets underway.
Financial markets also appear to be bracing themselves for a more bearish assessment of the euro-zone economy from ECB President Jean-Claude Trichet. Trichet is expected to echo recent comments from Axel Weber, the Bundesbank president and likely successor to Trichet this year, suggesting that there should be an extension of the central banks' extraordinary liquidity provisions into next year. Although there has been strong economic data from core countries in the region, such as Germany, peripheral ones are still seen struggling under tight fiscal regimes aimed at resolving their sovereign debt problems.
We expect a range for today in EURUSD rate of 1.2750 to 1.2850 (Short at 1.2850, stop loss at 1.2900, target OPEN)
USDJPY: Dollar/yen currency options declined slightly in Asia Thursday as players sold hedges against the dollar's downside due to a lack of sharp movements in the underlying exchange rate.
Benchmark one-month at-the-money volatilities edged down to 11.70%/12.40% from 11.80%/12.50% in New York Wednesday. The slight fall came as the dollar stuck to a Y84.12-Y84.55 range, above the 15-year low of Y83.58 marked last week.
Market participants are focused on U.S. jobless claims for the week ending Aug. 28, due at 1230 GMT. Jobless claims may decline slightly to 470,000 from 473,000 in the previous week, according to the median forecast of economists
There is also concern about developments in the U.S. Despite the strong ISM, some analysts are concerned that there could still be downside risks to Friday's non-farm payrolls data for August, especially in the latest jobless claims figures due later Thursday show another sharp rise.
If the data come in below expectations, that could stoke concerns about the U.S. economy and push investors toward safe-haven currencies such as the yen
We expect a range for today in USDJPY rate of 84.00 TO 84.65 (Long at 84.00, stop loss at 83.50, target OPEN)