Daily FX Market Commentary

Andy Harrison

Good morning,

NYK Close and Asia open

USDJPY 78.176 | EURUSD 1.20611 | EURJPY 94.30 | AUDUSD 1.02205 | NZDUSD 0.7854 | USDCAD 1.02217 | EURCHF 1.20104 | USDCHF 0.99578 | GBPUSD 1.55055 | EURGBP 0.77785

Harry Hindsight

·         EUR: After the weekend news the market opened slightly lower and although it moved up slightly was always offered and held below 1.2140 with most of the trading around the 1.2120 level as London entered the market early guys sold attempting to trigger stops below the 1.2100 area only to be forced back to 1.2130 as the early numbers hit the market another run was made lower breeching the 1.2100 level while the penetration failed to trigger stops below having been through 1.2100 it left the market vulnerable to further declines. As talk of a full bailout for Spain started to grow the market again fell further hitting a low just above 1.2040 before finding some support and moving to the 1.2160 level into the close.

·         GBP: We saw the market marked down on the opening only for GBP to rally to fill the gap during Asia, early London took time to buy some EURGBP in the early part but as concerns increased safe haven buying of GBP appeared unusual in itself but we moved from the 1.5485 area to above 1.5550 before dropping towards the lows again, closing slightly off the lows

·         JPY: With increasing concerns in Europe carry trade and safe haven buying of JPY continues all in the face of increasing verbal intervention as mentioned yesterday we count five levels of warning the usual comments made by BoJ or MoF officials they are continually spouting the level 3 warnings with only “Will take bold action if necessary” and “Closely communicating with foreign counter parties” rarely do we get to the last one before intervention occurs, and the last couple of occasions it has been all USDJPY requiring very little in the way of communication. The market moved just below 78.40 to hit a low of 78.10 and held with 78.30 the top end of the range for most of the day.

·         AUD: While indication have been improving for the Oz over the past week the Eurozone situation still drags on the currency however, for this session the CNY PMI figure moved the pair from the low opening below 1.0260 to above 1.0300, we moved into the London session with a pull back as Euro’s continued to come under pressure buy carry trade buying late into the IMM session moved the currency to a new high just below 1.0320, before Euro again dragged it lower and Oz started hitting week stops moving down to 1.0220 area.

·         Overall: Moody’s revising Germany and the Netherlands as exposure to Greece, some of the Spanish regions are looking for hand outs which later turned into Spain will need a general bailout, didn’t cause too much trouble in the market but enough to set new lows for the past 2years or so.

Yesterday’s premiership results

Actual = A | Consensus = C | Previous = P | Revised = R 

02:30     CNY        HSBC Flash Manufacturing PMI Jul A 49.5 | P 48.2             

07:00     EUR        French PMI Manufacturing Jul (P) A 43.6  | C 45.5 | P 45.2            

07:00     EUR        French PMI Services Jul (P) A 50.2 | C 47.5 | P 47.9           

07:30     EUR        German PMI Manufacturing Jul (A) A 43.3 | C 45.1 | P 45              

07:30     EUR        German PMI Services Jul (A) A 49.7 | C 50 | P 49.9           

08:00     EUR        Eurozone PMI Manufacturing Jul (A) A 44.1 | C 45.2 | P 45.1        

08:00     EUR        Eurozone PMI Services Jul (A) A 47.6 | C 47.1 | P 47.1     

08:30     GBP       BBA Mortgage Approvals Jun A 26269 | C 31200 | P 30238            

12:30     CAD       Retail Sales M/M May A 0.30% | C 0.50% | P -0.50%        

12:30     CAD       Retail Sales Less Autos M/M May A 0.50% | C 0.10% | P -0.30% 

14:00     USD       House Price Index M/M May A 0.80% | C 0.40% | P 0.80%

For today

USDJPY
Topside: 78.30-78.60 light offers 78.70-79.00 light offers 79.20-79.50 light offers 
Downside: 77.70-78.00 medium bids 77.20-77.50 decent bids EURUSD
Topside: 1.2090-1.2120 medium offers 1.2130-1.2160 mixed good 2 way 1.2170-1.2200 light offers 
Downside: 1.2000-1.2030 large sell stops 1.1950-1.1970 medium sell stops 1.1900-1.1930 large bids 

EURJPY
Topside: 94.70-95.00 light offers 95.00-95.30 light offers 95.40-95.70 light offers 
Downside: 93.50-93.80 light bids 93.00-93.30 light bids AUDUSD
Topside: 1.0250-1.0280 light offers 1.0300-1.0330 medium offers  1.0350-1.0380 medium buy stops 
Downside: 1.0180-1.0210 medium sell stops 1.0120-1.0150 light sell stops 1.0080-1.0110 medium sell stops 

22:45     NZD       Trade Balance (NZD) Jun A 331M | C 20M | P 301M | R 232M

23:50     JPY         Trade Balance (JPY) Jun A -0.30T | C -0.39T | P -0.66T | R -0.62T

0:00        AUD       Conference Board Leading Index May A 0.40% | C -1.40% | P -1.30%

1:30        AUD       CPI Q/Q Q2 A 0.50% | C 0.60% | P 0.10%               

1:30        AUD       CPI Y/Y Q2 A 1.20% | C 1.30% | P 1.60% 

1:30        AUD       CPI RBA Trimmed Mean Q/Q Q2 A 0.50% | C 0.60% | P 0.30% | R 0.40%

1:30        AUD       CPI RBA Trimmed Mean Y/Y Q2 A 2.00% | C 1.90% | P 2.20%       

1:30        AUD       CPI RBA Weighted Median Q/Q Q2 A 0.70% | C 0.60% | P 0.40%

1:30        AUD       CPI RBA Weighted Median Y/Y Q2 A 1.90% | C 1.90% | P 2.10%  

AUD:

Australia Q2 core inflation lowest in over decade

Australia’s Swan RBA Has Maximum Flexibility to Cut Rates

JPY:

BOJ Yamaguchi: Won’t Hesitate to Ease Further if Any Shocks to Japan Econ

BOJ Shirakawa Warns On Bank Losses If JGB Yields Rise Suddenly

Japan June Trade Surplus Y61.7B; Expected Deficit Y135B

JPY/CNY:

Toyota to invest $285 mio for China transmissions plant

EUR:

EFSF’s (P) Aaa Rating Outlook Changed to Negative by Moody’s

USD:

WSJ: Treasury’s Geithner: U.S. Financial System Still Faces Challenging, Uncertain Environment

CNY:

IMF softens China yuan stance to “moderately undervalued”

IMF: Chinese Authorities Ready to Apply More Stimuli if Needed

IMF: China’s Economy Making ‘Soft Landing,’ But Significant Risks Remain

China growth to gain pace in H2-industry ministry

SGD:

Singapore CB boosts capital, revises inflation outlook

Singapore tells banks to review interbank rate setting

NZD:

NZ Jun Goods Trade Surplus NZ$331M; Consensus Surplus NZ$50M

NZ on track for budget surplus target – FinMin

·         EUR: Late Nyk saw some profit taking entering the market moving it above 1.2070 briefly before the close however, Asia came in selling pushing it down to the 1.2055 area again and only around of EURAUD buying stopped it from sliding any further on the day and we managed to claw our way back to those 1.2070 levels on light volumes.

·         GBP: Cable struggled during the early part of the session with EURGBP buying being dominant in the market especially in the middle section, having moved down to the 1.5490 level from the NYK close it gradually moved back above 1.5500 but struggling to rally much beyond 1.5510 on a quiet day for the GBP.

·         JPY: Another tight day with the market caught between the safe haven flows and intervention concerns. We drifted from the opening 78.20 level down to 78.08 but ran out of steam and gradually moved back above 78.20.

·         AUD: Conflicting inflation data enter the market taking the Oz initially lower moving as black boxes took the news one way and the sensible people went for the other figures and the Oz rallied from there catching the short and causing a minor squeeze up to above the 1.0230 level to hold into the London session.

·         Overall: We had a quiet session with some movement in the Oz but nothing to write home about. Moody’s outlook for the EFSF AAA rating moved to negative as they continue to cause consternation across the board with sweeping observations about the state of the horse that left the stable two years ago.

 

Today’s data

Consensus = C  Previous = P Timings GMT

08:00     EUR        German IFO – Business Climate Jul C 104.5 | P 105.3        

08:00     EUR        German IFO – Current Assessment Jul C 113 | P 113.9     

08:00     EUR        German IFO – Expectations Jul C 96.8 | P 97.3     

08:30     GBP       GDP Q/Q Q2 (A) C -0.20% | P -0.30%      

08:30     GBP       GDP Y/Y Q2 (A) C -0.30% | P -0.20%        

08:30     GBP       Index of Services 3M/3M May C 0.30% | P 0.00%             

10:00     GBP       CBI Trends Total Orders Jul C -10 | P -11

14:00     USD       New Home Sales Jun C 370K | P                369K     

14:30     USD       Crude Oil Inventories C 0.0M | P -0.8M 

Ranges as of 6am London time

                                Highs   Lows

USD/JPY             78.239 | 78.07

EUR/USD             1.20799 | 1.20526

EUR/JPY             94.455 | 94.14

AUD/USD             1.0243 | 1.017

NZD/USD             0.7846 | 0.7808

USD/CAD             1.0232 | 1.021

EUR/CHF             1.20109 | 1.201

USD/CHF             0.99639 | 0.9942

GBP/USD            1.5517 | 1.5491

EUR/GBP            0.77885 | 0.7776

 

Have a good day

Andy