FX News – October 17: Yen Falls, Aussie Rises Vs Greenback

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Leaders of the US Senate have finally agreed to raise the country's debt limit, ending a two-week impasse on the issue. The agreement would extend the US debt limit until 7 February 2014. However, this has to go through Congress first before it becomes a law. Until then, credit risk is expected to continue to loom over the US.

The news of the agreement pushed the greenback higher against the yen around the opening of the US session. It peaked just above the 98.95 zone, before sliding down to below 98.80.

The USD/JPY pair is currently trading at 98.79, with initial resistance seen at 99.31 followed by 99.56. Meanwhile, initial support is at 98.45, followed by 98.21.

In Australia, the aussie rose even higher against the greenback after the news of the US Senate agreement. It dipped slightly at the opening of the Asian session, but then picked up again after the release of Australia's business confidence. The survey showed that the country's business confidence is at its highest in 2 years, which rose from -1 in the second quarter to 3 in the third quarter. On the flipside, business conditions sunk further from -6 in the second quarter and then -7 on the third quarter.

Meanwhile, economists at the ANZ said that they expect no further rate cuts from the Reserve Bank of Australia. This reverses their earlier view that a 25 bps cut is due in February 2014. In addition, they predicted that the cash rate would be at the 4% 'equilibrium' level by the first half of 2015. This means that interest rates are expected to go back up from now on.

The AUD/USD pair is currently trading at 0.9551, with initial resistance seen at 0.9586, followed by 0.9610. Meanwhile, initial support is at 0.9524, followed by 0.9500.

By FX Strategy Team, Published on 17th of October 2013
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