Daily FX Market Commentary

Andy Harrison

Good morning,

NYK Close

USDJPY 78.26 | EURUSD 1.25933 | EURJPY 98.55 | AUDUSD 1.0247 | NZDUSD 0.7976 | USDCAD 0.98588 | EURCHF 1.20092 | USDCHF 0.95363 | GBPUSD 1.58859 | EURGBP 0.79271 |

 

Harry Hindsight

·         EUR: As could be expected on a Labour day in the US the market was quiet with the only real news was comments from Draghi who told the Euro parliament he would be comfortable buying sovereign bonds with maturities up to three years, and that this does not constitute state financing or break EU treaties, from an opening range of 1.2576 we’d moved to the low 60’s during Asia and late into the London session it moved up quickly to 1.2611 on the Draghi comments, once London officially closed we held around the 1.2595 area into the end of day.

·         GBP: Cable struggled during the Asian session moving down from its opening range 1.5876 to trade to the 1.5850 level before finding some support moving back to trade around the 1.5870 level until the London open and the PMI figures that triggered some movement higher to the 1.5890 level were we ranged for the rest of the day with the starting line as a base.

·         JPY: A quiet day throughout we moved down to trade briefly below 78.20 before finding its legs and moving back to the starting area just before London, London moved to above 78.40 in early London before spending the rest of the day drifting back to the starting area and finishing only 5tics or so higher.

·         AUD: Started strongly in Asia testing the 1.0300 level before failing and moving lower retail sales put paid to any rally and we started to drop off quickly with EURAUD cross playing a large part, touching 1.0255 briefly then another run lower to couch 1.0240, the sell off was contained and we found there was a minor rally to above 1.0270 and London came in selling and we again broke down to the 1.0240 level to trade in the low 30’s, sporadic trading moved the market above 40 but it was patchy.

Friday’s premiership results

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

NZD       Terms of Trade Index Q/Q Q2 A -2.60% | C -2.00% | P -2.30%     

JPY         Capital Spending Q2 A 7.70% | C 8.90% | P 3.30%              

AUD       TD Securities Inflation M/M Aug A 0.60% | P 0.20%         

CNY        Non-manufacturing PMI Aug A 56.3 | P 55.6       

AUD       Retail Sales M/M Jul A -0.80% | C 0.20% | P 1.00% | R 1.20%

CNY        HSBC Manufacturing PMI Aug (F) A 47.6 | P 49.3

CHF        Retail Sales (Real) Y/Y Jul A 3.20% | C 4.50% | P 3.70% | R 3.30%

CHF        SVME-PMI Aug A 46.7 | C 49.1 | P 48.6  

EUR        Eurozone PMI Manufacturing Aug (F) A 45.1 | C 45.3 | P 45.3      

GBP       PMI Manufacturing Aug A 49.5 | C 46.1 | P 45.4 | R 45.2

For today

USDJPY:
Topside: 78.50-78.85 light scaled offers 78.85-79.10 small offers
Downside: 78.00-78.25 good bids 77.70-78.00 good two way better bid

EURUSD:
Topside: 1.2600-1.2630 light offers 1.2630-1.2665 good two way interest 1.2670-1.2700 decent offers

Downside: 1.2545-1.2575 small bids 1.2505-1.2540 good sell stops 1.2460-1.2495 decent scaled sell stops EURJPY:
Topside: 98.90-99.20 marginal buy stops
Downside: 97.90-98.20 decent sell stops

AUDUSD:
Topside: 1.0275-1.0305 marginal offers 1.0310-1.0345 light offers
Downside: 1.0180-1.0220 decent sell stops

23:01     GBP       BRC Sales Like-For-Like Y/Y Aug A -0.40% | C -0.50% | P 0.10%    

23:50     JPY         Monetary Base Y/Y Aug A 6.50% | C 9.40% | P 8.60%      

1:30        AUD       Current Account Balance (AUD) Q2 A -11.8B | C -12.3B | P -13.0B              

4:30        AUD       RBA Rate Decision A 3.50% | C 3.50% | P 3.50% 

 

AUD:

Australia’s RBA Statement on Monetary Policy; Rates Unchanged at 3.5%

Australia’s PM Gillard Says Mining Boom Decline Exaggerated

Australia’s Fortescue slashes capex as iron ore market drops

S&P warns Australia’s Fortescue credit quality at risk

Australia 2Q Current Account Deficit A$11.8B

Australia government spending rises 1.9 pct in Q2

JPY:

Japan Finance Minister Announces Delay in Tax Grant Payments to Municipalities

EUR:

Moody’s Puts European Union On Negative Outlook

CNY:

China’s big four banks lend $34.7 bln in Aug- paper

China may lower barriers for county bond issuance paper

GBP:

Olympics keep Britons away from shops in August – BRC

EUR: Asia started quietly with the Euro moving sideways trading in a tight 1.2582-94 before finding some quiet buying creeping in during mid-session a rehash of the Draghi story, Moody’s kept the AAA rating for the European Union but changed the outlook to negative, the market took that as good and Euro’s pushed higher to trade above 1.2625 before settling back slightly in anticipation of the AUD rate announcement which is more or less where we look to be heading into London 1.2615.  

GBP: Cable was very quiet in early trading moving in less than a 10tic range for the first 4 hours before breaking higher with the Euro to trade just below the 1.5900 level, Oz rate announcement saw some GBPAUD cross selling going through as weak stops were triggered moving the Cable back to just below 1.5890.

JPY: USDJPY stayed contained in yesterday’s range moving up briefly above the 78.40 level only to drift back to the mid 78.30’s again on very quiet trading.

AUD: Oz spent the better part of the session in the 1.0224-50 range as the market waited for the rate announcement that everyone said would be a hold, and when it came it didn’t disappoint and the rate was unchanged at 3.50% moving the market to above 1.0265 as we regain the previous 48hrs losses somewhat, local news that A$100bio of mining projects is under threat as the price of success bites with high wages and transportation costs kick in and companies scramble to reassess their long term investments, did nothing in the market although that may be a story to follow later in the year if the Euro saga continues.

Today’s data

Consensus = C  Previous = P Timings GMT

5:45        CHF        GDP Q/Q Q2 C 0.20% | P 0.70% 

8:30        GBP       PMI Construction Aug C 50 | P 50.9         

9:00        EUR        Eurozone PPI M/M Jul C 0.20% | P -0.50%            

9:00        EUR        Eurozone PPI Y/Y Jul C 1.60% | P 1.80% 

14:00     USD       ISM Manufacturing Aug C 50 | P 49.8     

14:00     USD       ISM Prices Paid Aug C 46.5 | P 39.5          

14:00     USD       Construction Spending M/M Jul C 0.40% | P 0.40%

 

Ranges as of 6am London time

                                Highs   Lows

USD/JPY               78.431 | 78.26

EUR/USD             1.2629 | 1.2581

EUR/JPY               98.996 | 98.52

AUD/USD            1.0273 | 1.0224

NZD/USD             0.7989 | 0.7955

USD/CAD             0.9866 | 0.9851

EUR/CHF              1.20097 | 1.2009

USD/CHF             0.95449 | 0.9507

GBP/USD             1.5900 | 1.5877

EUR/GBP             0.7942 | 0.7924

Stay lucky

Andy