Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 105.952 | EURUSD 1.09737 | AUDUSD 0.67622 | NZDUSD 0.63332 | USDCAD 1.33387 | USDCHF 0.98672 | GBPUSD 1.20844 |

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               1.09799 | 1.09687

USDJPY                106.063 | 105.827

GBPUSD              1.21122 | 1.20636

USDCHF               0.98797 | 0.98648

AUDUSD             0.67830 | 0.67559

USDCAD              1.33444 | 1.33239

NZDUSD              0.63489 | 0.63282

EURCHF               1.08374 | 1.08243

EURGBP              0.90814 | 0.90621

EURJPY                116.445 | 116.137

For Today

• GBP: Calm before the storm? The market opened testing the 1.2100 level before falling back to the closing level and then moving quietly through to the Tokyo session eventually pushing slowly through the 1.2100 level to run to just above the 1.2110 area before drifting through to the London session, Topside offers likely to be around the sentimental 50/00 areas with the market a little nervous of going either way a push through to the 1.2150 level will likely see some weak stops and light offers then reappearing into the 1.2200 level however, a push beyond here could see weak stops through the level and the market quickly running higher with limited offers to the 1.2300 and stronger offers likely to appear, downside bids light through to the 1.2000 level with no real stops until beyond the 1.1950 area.
• JPY: Opening around the 105.90 level the market struggled quietly into Tokyo holding just above the level before dipping in early trading through to the lows just through 105.85 before steadily recovering on a run to the highs just short of the 106.10 level before holding quietly into London close to the opening levels. Downside bids starting to light through the 106.00 level but some congestion through to the 105.80 areas before firming up around the 105.00 areas and increasing on any move to the 104.50 level with stops likely to not appear until through the 104.00 level and the likelihood of buyers willing to buy into any dips, Topside offers through the 106.80 area likely to be reasonably strong with possible weak stops through the 107.00 area opening a challenge to the 107.50 level before stronger congestion appears with limited potential to squeeze to the 108.00 level.
• AUD: Slow move higher for the Oz pushing off the early lows round the 0.6755 area to struggle into early Tokyo pushing the 0.6770 level before dipping and running for a second time once the GDP numbers were released and in line with expectations, the market tested to above the 0.6780 levels and then ranged quietly around the level to the London session, downside bids likely to reforming around the 0.6700 areas and increasing through to the 0.6680 level, a break through the level is likely to see weak stops appearing and the market open to a larger move over the long run however, a dip into the 0.6620 area will again see strong bids appearing, Topside offers into the 68 cents level remain and through to the 0.6820 level before weak stops appear and the potential for a squeeze higher through to the stronger offers into the 0.6880 areas and through onto the 69 cents level.
• EUR: Limited range for the Euro with minor attempts to push through to the 1.0980 level before holding quietly around the mid 1.0970’s through to London, downside bids into the 1.0920 level and likely to continue through to the 1.0880 level however, congestion is then likely to start increasing as the market moves into the mid ranges from 2015-16 with limited bids until 1.0800,  Topside offers light back through the 1.1000 areas with weak stops above the 1.1020 level opening the market to a possible squeeze through to the 1.1080 areas and offers reappearing.

Overnight News

GBP:

Parliament takes vote over the government by 328-301 pushing for a block to no deal Brexit

Whip removed from 21 Conservative MP’s how voted with Parliamentary MP’s

UK’s Johnson says Govt. proposing motion for General election

Johnson: vote will hand power to EU

Johnson: On brink of wrecking any Brexit deal

MP’s are falling for Johnson’s Brexit trap DPA (Germany’s Landeszeitung)

USD:

Feds Rosengren sees no immediate easing needed despite risks

Rosengren: Many financial indicators remain benign

Rosengren: US growth around 2% if consumers keep spending

Rosengren: Tariffs, global weakness are key risks for US

Rosengren: May need further easing if risks get more pronounced

Mattis: China’s crackdown on Hong Kong protesters is a sign of China’s dangerous ambitions BDR

USD/CNY:

Trump wanted to double tariffs against China – DJ

CNY:

China warns it could unilaterally impose emergency rule on Hong Kong TEL

Beijing asserts power to declare emergency to quell Hong Kong unrest – WSJ

EUR:

ECB’s Villeroy signals scepticism over fresh bond buying BBG

JPY:

Japan’s small banks load up on risk as they fight to survive – BBG

Today’s Data

Actual A | Consensus C | Previous P | Revised R | all timings GMT/UTC

AUD       AiG Performance of Service Index (AUG) A 51.4 | P 43.9

AUD       Gross Domestic Product (QoQ) (2Q) A 0.5% | C 0.5% | P 0.4%

AUD       Gross Domestic Product (YoY) (2Q) A 1.4% | C 1.4% | P 1.8% | R 1.7%

CNY        Caixin China PMI Composite (AUG) A 51.6 | P 50.9

CNY        Caixin China PMI Services (AUG) A 52.1 | 51.7 | P 51.6

08:30     GBP        Markit/CIPS UK Services PMI (AUG) C 52 | P 51.4

08:30     GBP        Markit/CIPS UK Composite PMI (AUG) P 50.7

09:00     EUR        Euro-Zone Retail Sales (YoY) (JUL) C 2.0% | P 2.6%

11:00     USD        MBA Mortgage Applications (AUG 30) P -6.2%

12:30     USD        Trade Balance (JUL) C -$53.4b | P -$55.2b

14:00     CAD       Bank of Canada Rate Decision (SEP 4) C 1.75% | P 1.75%

18:00     USD        U.S. Federal Reserve Releases Beige Book

Harry Hindsight

 

• GBP: Opening quietly and holding around the 1.2065 area the market slipped lower as the day wore on with early Tokyo seeing a steady stream of selling and the Cable pushed to 1.2050 and then after an hour or so slipping again to the 1.2030 level and holding quietly then through into London, with the upcoming vote with Rebel MP’s attempting to stop the threat of a no deal Brexit London took the market down through the 1.2000 level triggering some weak stops along the way but running into congestive bids once the market hit the 1.1960 areas before starting a recovery rising quickly back to the 1.2000 level and then holding quietly around the area before jumping quickly as the rumours of Conservative defections or moving over to the rebel camp the market quickly spiked to the 1.2085 area before drifting through into the NYK session holding the 1.2020 areas and awaiting the vote/debate, as time wore on the market slowly pushed through to the previous highs holding between the 1.2090/1.2100 levels with limited push to the 1.2105 area and running to the close just below the figure levels.
• JPY: Quiet through too the Tokyo session the market moved off the opening levels to push from 106.20 through steadily into the 106.35 area however, limited attempts to push the 106.40 saw the market drifting through into the London session, London were quick sellers and the market quickly found itself testing the 105.90 area before moving off the level and starting a steady rise through London and into NYK testing back to the 106.30 level again, weaker US numbers saw the USD fall back and the USDJPY was quickly testing through to the mid 105.70’s before bouncing back above the 105.80 level and a slow grind through to the close pushing a little above the 106 level before finishing just above the 105.90’s for the close.
• AUD: A slow ebb through the early part of the session with the market dropping back from the early opening highs around the 0.6715 and then slowly drifting through to test to the 0.6690 level before the RBA announcement, no change and while generally unchanged the commentary seemed a little less dovish than previous, the market quickly recovered to the opening levels to move into London slowly pushing to the 0.6725 before holding quietly through to the NYK session with the weak US numbers sending the Oz again higher testing through the 0.6750 level and then holding quietly around the 0.6760 areas to the close.
• EUR: A steady drop off from the opening slipping from the 1.0970 level and testing through 1.0960 areas the move through that 60 level saw the market increase its descent dropping quickly through the 1.0950 areas and although the market slowed its descent it managed to push through to the 1.0930 levels before rallying a little into the London session with quick push higher from eastern European buyers took the market towards the 1.0950 level before drifting back again and trading through to the NYK session falling lightly through the 1.0930 level to make the lows around the 1.0925 area, the release of the US numbers quickly saw the market recovering bouncing a little for the run to the numbers and then quickly moving through to the 1.0975 level extending the highs a little late the market struggled to the close holding its small gains.

 

Yesterday’s Premiership results

JPY         Monetary Base (YoY) (AUG) A 2.8% | P 3.7%

JPY         Monetary Base End of period (AUG) A ¥515.9t | P ¥518.1t

AUD       Current Account Balance (Australian Dollar) (2Q) A A$5.9b | P -A$2.9b | R -A$1.1b

AUD       RBA Cash Rate Target (SEP 3) A 1.0% | C 1.0% | P 1.0%

CHF        Consumer Price Index (MoM) (AUG) A 0.0% | C -0.1% | P -0.5%

CHF        Consumer Price Index (YoY) (AUG) A 0.3% | C 0.3% | P 0.3%

CHF        CPI EU Harmonized (MoM) (AUG) A 0.0% | P 0.0%

CHF        CPI EU Harmonized (YoY) (AUG) A 0.5% | P 0.4%

CHF        CPI Core (YoY) (AUG) A 0.4% | C 0.4% | P 0.4%

GBP        Markit/CIPS UK Construction PMI (AUG) A 45 | P 45.3

CAD       RBC Canadian Manufacturing PMI (AUG) A 49.1 | P 50.2

USD        ISM Manufacturing (AUG) A 49.1 | C 51.3 | P 51.2

USD        ISM Employment (AUG) A 57.4 | C 51.5 | P 51.7

USD        ISM Prices Paid (AUG) A 46 | C 45.8 | P 45.1

USD        Construction Spending (MoM) (JUL) A 0.1% | C 0.3% | P -1.3% | R -0.7%

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