Daily FX Market Commentary

Andy Harrison

Good morning,

NYK Close

USDJPY 78.568 | EURUSD 1.2306 | EURJPY 96.689 | AUDUSD 1.0582 | NZDUSD 0.81183 | USDCAD 99108 | EURCHF 1.20106 | USDCHF 0.97598 | GBPUSD 1.56389 | EURGBP 0.78682 |

 

Harry Hindsight

·         EUR: Having stayed in a tight range during Asia and been unaffected by the CNY data unlike the local currencies it held on to the 1.2380 up until early Europeans came in heading into the London fix were we found EURGBP supply and this seemed to be the catalyst for a continuing round of selling throughout the day, a set of good numbers in the US turned it into a risk off and USD became dominant across the board and Euro’s moved down to the 1.2270 in the steady selling across the day, we regained some to finish above 1.2300 but with a lack of substance from Europe it was always going to struggle.

·         GBP: Cable performed better in Asia as some safe haven flows seemed to be moving against the Euro but although we moved from 1.5655 level to trade above 1.5680 the trade balance figure more or less put paid to that one and we ended up being sold all throughout London and into early NYK hitting a low of 1.5606 before bouncing back above 1.5640 before heading back to the level, as rumours of option expiry’s rested there, it failed to penetrate back through 1.5600 and steadily moved back to finish above 1.5630 on the day.

·         JPY: The Yen had a choppy session with a steady narrow session in Asia opposed to the wake up just before NYK opening when EURJPY stops sent the USDJPY to hit 78.30, NYK reversed the move and pushed the USDJPY higher as the Euro leg weakened almost getting to 78.80 before settling in for a sedate last couple of hours into the close.

·         AUD: Mixed fortunes for the Oz good employment numbers initially sent the Oz higher pushing above the 1.0610 level only to fail to trigger stops, before the Chinese data started to filter through inflation numbers were worse than expected but conflicted, but production numbers were down again, and retail sales also fell, the Oz dropped after each figure not by much as Australian exporters to China tend to be raw than made, but the fact that luxury goods does not seem to be affected by those retail numbers could have a baring depending on what slant you take, we traded down to they 1.0563 level several times and seemed to find reasonable support.

Yesterday’s premiership results

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

NZD       Unemployment Rate Q2 A 6.80% | C 6.50% | P 6.70%     

NZD       Employment Change Q/Q Q2 A -0.10% | C 0.40% | P 0.40%          

JPY         Japan Money Stock M2+CD Y/Y Jul A 2.20% | C 2.20% | P 2.20% 

JPY         Machine Orders M/M Jun A 5.60% | C 11.00% | P -14.80%           

JPY         Housing Loans Y/Y Q2 A 2.70% | C 2.40%               

CNY        CPI Y/Y Jul A 1.80% | C 1.70% | P 2.20% 

CNY        PPI Y/Y Jul A -2.90% | C -2.60% | P -2.10%            

AUD       Employment Change Jul  A 14.0K | C 10.0K | P -27.0K | R -28.3K

AUD       Unemployment Rate Jul  A 5.20% | C 5.30% | C 5.20% | R 5.30%

JPY         BoJ Rate Decision A 0.10% | C 0.10% | P 0.10%   

JPY         Household Consumer Confidence Jul A 39.7 | C 40.8 | P 40.4       

CNY        Industrial Production Y/Y Jul A 9.20% | C 9.70% | P 9.50%              

CNY        Fixed Assets Inv Y/Y Jul A 20.40% | C 20.60% | P 20.40%

CNY        Retail Sales Y/Y Jul A 13.10% | C 13.60% | P 13.70%          

JPY         Machine Tool Orders Y/Y Jul A -6.80% | P -15.50%            

GBP       Visible Trade Balance (GBP) Jun A -10.1B | C -8.5B | P -8.4B         

CAD       Housing Starts Jul A 209K | C 213.5K | P 222.7K | R 222K

CAD       New Housing Price Index M/M Jun A 0.20% | C 0.40% | P 0.30%

CAD       Trade Balance (CAD) Jun A -1.8B | C -0.90B | P -0.79B     

USD       Trade Balance Jun A -42.9B | C -$47.6B | P -$48.7B | R -48B

USD       Initial Jobless Claims A 361K | C 370K | P 365K | R 367K

USD       Wholesale Inventories Jun A -0.20% | C 0.30% | R 0.30%               

USD       Natural Gas Storage A 30B | P 28              

For today

USDJPY:
Topside: 78.75-79.05 good buy stops 79.05-79.30 decent staggered offers 79.30-79.55 small buy stops
Downside: 78.20-78.50 medium sized scaled bids 77.95-78.20 light sell stops EURUSD:
Topside: 1.2310-1.2345 small offers 1.2370-1.2405 light offers
Downside: 1.2230-1.2260 marginal scaled sell stops 1.2170-1.2205 light mixed

EURJPY:
Topside: 97.10-97.40 small offers
Downside: 96.00-96.35 decent sell stops 95.70-96.00 good scaled sell stops AUDUSD:
Topside: 1.0605-1.0640 small buy stops 1.0650-1.0680 good buy stops
Downside:1.0500-10 mixed

 

                CNY        Trade Balance (USD) Jul                A $35.05B | P $31.72B    

23:50     JPY         Domestic CGPI M/M Jul                A -0.40% | C 0.10% | P -0.60% | R -0.70%

 

CNY:

China July Exports Rise 1% vs. Economists’ Estimate for 8%

China July New Loans 540.1 Billion Yuan vs. Est. 700 Billion Yuan

China to Be Cautious About Monetary Policy: Securities Journal

China May Expand Real Estate Tax Trials to More Cities by Year-End – Report

AUD:

Australia CB lifts 2012 growth forecast, warns on high A$

SGD:

Singapore Revised 2Q GDP Down 0.7% Adj on Quarter, Annualized

Singapore Monetary Policy Appropriate ‘As It Stands Now’: Ong

KRW/JPY:

South Korea President to Visit Disputed Islands -Reports

JPY/KRW:

Japan Govt Fujimura: Have Requested S Korea Pres. Not Visit Disputed Islands

 

·         EUR: A quiet day with steady declines in the Euro from the opening above 1.2300 to 1.2285 with volumes lower than we’ve seen for most of the week, maybe the inflationary figures later today may liven up the market but for the moment we seem to have settled into a weekend mentality.

·         GBP: No different than the Euro, cable initially hung on to the topside above 1.5635 level for the greater part of the session but eventually started to give ground on cross selling moving down to 1.5618 in the latter part of the session.

·         JPY: We moved up in the early part of the session it being a Gotobi day, (being devisable by 5) which usually leads to USDJPY buying for the fix however anyone wishing to sell on the fix took their opportunity beforehand only leaving supply when the actual fix started and we made the lows during that period trading down to 78.50 finding support there the market again regained its losses and stayed around the 78.60 mark for the rest of the session in a quiet session.

·         AUD: Struggled to maintain it gains from yesterday moving slowly down from the opening area of 1.0580 to 1.0565 during the first half of the session, while the Chinese trade balance figures were better than previous but not as good as the market expected had the Oz falling a little quicker on a quiet day, and several decent sized clips took the market down in steps from that point to hit 1.0512 into the London open.

 

Today’s data

Consensus = C  Previous = P Timings GMT

6:00        EUR        German CPI M/M Jul (F) C 0.40% | P 0.40%         

6:00        EUR        German CPI Y/Y Jul (F) C 1.70% | P 1.70%             

8:30        GBP       PPI Input M/M Jul C 1.00% | P -2.20%    

8:30        GBP       PPI Input Y/Y Jul C -2.00% | P -2.30%      

8:30        GBP       PPI Output M/M Jul C -0.10% | P -0.40%               

8:30        GBP       PPI Output Y/Y Jul C 2.00% | P 2.30%      

8:30        GBP       PPI Output Core M/M Jul C 0.10% | P -0.20%      

8:30        GBP       PPI Output Core Y/Y Jul C 1.70%  | P 2.00%          

12:30     USD       Import Price Index M/M Jul C 0.00% | P -2.70% 

12:30     CAD       Unemployment Rate Jul C 7.30% | P 7.20%         

12:30     CAD       Net Change in Employment Jul C 10.0K | P 7.3K 

18:00     USD       Monthly Budget Statement Jul C -103.0B | P -59.7B

 

Ranges as of 6am London time

                                Highs   Lows

USD/JPY               78.642 | 78.496

EUR/USD             1.23069 | 1.22864

EUR/JPY               96.72 | 96.52

AUD/USD            1.0578 | 1.0515

NZD/USD             0.812 | 0.8087

USD/CAD             0.9936 | 0.9912

EUR/CHF              1.2012 | 1.20103

USD/CHF             0.97745 | 0.9762

GBP/USD             1.5638 | 1.562

EUR/GBP             0.7871 | 0.78635

 

 

Have a good weekend

Andy