Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 99.161 99.11-25 | EURUSD 1.30108 1.3004-15 | EURJPY 129.042 128.883-129.174 | AUDUSD 0.91386 0.9116-0.9145 | NZDUSD 0.77452 0.7707-80 | USDCAD 1.05181 1.0503-27 | EURCHF 1.22929 1.2282-1.23155 | USDCHF 0.94484 0.9423-845 | GBPUSD 1.52102 1.5171-1.5214 | EURGBP 0.85531 0.8546-735 |

 

Weekend News

JPY:

BOJ’s Shirai Says Weaker Yen May Boost Asian Competitiveness
CNY:

Xi Says China Shouldn’t Solely Assess Officials on GDP: Xinhua
China Faces More Pressure From Capital Inflow Than Outflow: PBOC
SAFE’s Guan Says No ‘Best Time’ to Open China Capital Account
China Regulator Says Bank Reserves Enough to Weather Cash Crunch
China Banking Regulator Says Local Government Debt Controllable
China’s Securities Regulator Says Market Operations Stabilized
China Should Move Towards Framework Guided by Short Rates: IMF
China Should Introduce Gov’t Bond Futures: Financial Exchange
CNH:

Hong Kong Targets 2T Yuan in Bank Deposits, Sing Tao Reports
EUR:

ECB Suspends Cyprus Bonds as Collateral on Rating Downgrades
Urpilainen Says Cyprus Must Take Initiative on Bailout Program
Eurozone Conditions Not Comparable to U.S., ECB’s Coeure Says
Schaeuble Says Europe Can’t Take Stability for Granted: Le Soir
France to Seek EU14Bln Spending Cuts to Slash Deficit: Le Monde
GBP:

Prime London Home Prices Rose 0.4% in June, Knight Frank Says
AUD:

Rudd Overtakes Abbott as Australian Voters’ Pick, Poll Shows

Harry Hindsight

  • EUR: With both sides of the Atlantic trying to talk their currencies down it would seem the market voted on the Euro, we started the day around the 1.3035 area and struggled to move either way in early trading only once comments from CNY were made did the market start to move with the AUD making early moves triggering EURAUD buying as the Oz moved lower, with several crosses moving as a byplay. Euro’s moved strongly to above the 1.3070 level before holding in the area for several hours as the market calmed down. We moved into the grey hours with early Europeans selling from the highs to take the market back to the opening level before moving into the London session and a steady climb higher with good retail sales out of Germany and a steady CPI. We peaked above the 1.3100 level as some minor stops were triggered just before the release of the US data, with comments by a German newspaper intimating to further bond buying for the Group of 17 countries the dovish tone again set the Euro lower trading down through the opening level and squeezing out the longs on the day and then we hit the US data which was slightly better than expected doing further damage to the Euro, we pushed below the 1.3000 level but again struggled to push through the 1.2990 which is beginning to look like a pivotal area. We rose slightly in the back end of the session settling above the 1.3000 area in quiet trading.
  • GBP: Cable rose in Asia moving from the opening level to push to the 1.5280 but struggled from that point on, with early East Europeans selling GBP against a raft of currencies to take it to the 1.5250 area into the London opening, Once London opened they continued the move with a weaker than expected House price number we moved to the 1.5230 area, the market struggled for a few hours gaining only slightly before the Euro move lower which Cable followed as the USD ascended, we touched below the 1.5170 area and only the US data saved the market from dropping any further and we managed a minor rally back to above 1.5210 into the close.
  • JPY: USDJPY rose steadily with the Yen weakening against most of the currencies, we moved from the 98.40 area into the London session hovering just below 99.00 and this time the market was not going to be persuaded otherwise with retail Japan busy during its session the pressure to break through was too much and the London session pushed it above the 99.10 area before pausing. NYK carried on the move especially after the data pushing to above the 99.40 level before drifting back into the close around 99.20.
  • AUD: The Oz opened quietly and traded around the 0.9280 opening levels into the Tokyo opening where we saw heavy selling appear in both straight AUDUSD and AUDJPY as the Yen weakened giving opportunities for profit taking for the Japanese retail market, add to which what seemed to be system selling of the Gold which dropped suddenly by $20 to 1,180.00 at one stage before recovering once the supply was over with. The Oz traded to just below the 0.9220 level before holding and slowly rising over the course of the session and into the grey hours to where it had started. London opened selling the pair slowly over the course of the session until the NYK market opened and the USD became the darling of the day, the Oz lost ground and traded to a new 3yr low before holding just below the 0.9120 level with some light buying appearing from profit takers moving the pair to settle around the 0.9140 area.

Friday’s premiership results

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

NZD       Building Permits M/M May A 1.30% | C -3.90% | P 18.50%

GBP       GfK Consumer Sentiment Jun A -21 | C -21 | P -22

JPY         Nomura/JMMA Manufacturing PMI Jun A 52.3 | P 51.5

JPY         Household Spending Y/Y May A -1.60% | C 1.30% | P 1.50%

JPY         Unemployment Rate May A 4.10% | C 4.00% | P 4.10%

JPY         National CPI Core Y/Y May A 0.00% | C 0.00% | P -0.40%

JPY         Tokyo CPI Core Y/Y Jun A 0.20% | C 0.20% | P 0.10%

JPY         Industrial Production M/M May (P) A 2.00% | C 0.20% | P 0.90%

JPY         Retail Trade Y/Y May A 0.80% | C 0.00% | P -0.10%

JPY         Housing Starts Y/Y May A 14.5% | C 6.20% | P 5.80%

GBP       Nationwide House Prices M/M Jun A 0.30% | C 0.40% | P 0.40%

EUR        German Retail Sales M/M May A 0.80% | C 0.40% | P -0.40% | R -0.10%

CHF        KOF Leading Indicator Jun A 1.16 | C 1.2 | P 1.1

GBP       Index of Services 3M/3M Apr A 0.80% | C 1.10% | P 0.60%

EUR        German CPI M/M Jun (P) A 0.10% | C 0.00% | P 0.40%

EUR        German CPI Y/Y Jun (P) A 1.80% | C 1.70% | P 1.50%

CAD       GDP M/M Apr A 0.10% | C 0.00% | P 0.20%

CAD       Industrial Product Price M/M May A 0.00% | C 0.70% | P -0.80%

CAD       Raw Materials Price Index M/M May A 0.20% | C 2.30% | P -2.20%

USD       Chicago PMI Jun A 516 | C 55 | P 58.7

USD       U. of Michigan Confidence Jun (F) A 84.1 | C 83 | P 82.7

 

For today

USDJPY:
Topside: 99.70-100.00 light offers 100.00-100.40 medium sized offers
Downside: 98.70-99.00 light mix 98.35-98.70 light bids

EURUSD:
Topside: 1.3040-1.3080 light offers 1.3090-1.3120 light offers 1.3120-.3150 light buy stops
Downside: 1.2980-1.3000 light sell stops Then Bids every 20 Tics from 1.2980

EURJPY:
Topside: 130.00-130.30 light offers
Downside: Nothing of note

AUDUSD:
Topside: 0.9200-9230 light stops

Downside: 0.9070-0.9100 light sell stops 0.9040-0.9070 light sell stops

 

JPY: BOJ Tankan Survey Shows Upward Surge in Business Sentiment

Japan PM Abe’s ruling party on track for upper house win

Toyota Says Abenomics Creating Good Environment with Weaker Yen

Amari Says Japan’s Real Economy Is Clearly Recovering

Japan land prices fall at slowest pace in 5 yrs. in 2012-govt

EUR/JPY:

Japan Bought 10.3% of ESM Bonds Sold in June, Official Says

CNY:

China June Official Manufacturing PMI 50.1 vs. 50.1 Market Expectation

China HSBC PMI slips to 9-month low of 48.2 in June

PBOC’s Zhou Wants Banks to Adjust Lending, Business News Reports

China’s SAFE Ready for Possible End of U.S. QE: Morning Post

China Average Home Prices Rise in June, On-Month Gains Slow

USD:

Lew: Economy Strengthening, Though Fiscal Policy Hurting Growth

AUD:

Australian inflation gauge stays tame in June TDMI

Australian Manufacturing Improves in June

NZD:

N.Z. Treasury Expects Drought Will Reduce 2Q GDP Growth

 

 

  • EUR: The market opened in line with Friday’s close and moved sideways into the Tokyo opening. From the opening the market traded slowly higher, helped by speculation on which direction the next rate move will be, we traded to the 1.3026 area in a very quiet and limited range.
  • GBP: Cable opened around the 1.5205 area and struggled to the high teens over the course of the session with very little happening in the market and only limited news over the weekend. For the moment we hold around the highs in a quiet session.
  • JPY: The market opened around the 99.25 level and started to move higher from the release of the Tankan report with Large Manu coming in as expected but far better than the previous months number, with the whole report looking a little better the Yen weakened and we touched above 99.45 pre Tokyo and then spiked to just short of the 99.55 level in Tokyo itself. However, once the data was out we drifted back to just above the opening levels and have been trading in a tight range since with the market holding in the mid 99.30’s for the moment.
  • AUD: Pre opening the market traded as low as 0.9110 to set a new 3yr low however, once we moved into the Tokyo session we started to see buyers appear with Moody’s confirming the AAA status stating fundamentals support the level, with chatter across the market continuing to support the move higher we traded in a tight channel into stops around the 0.9180 level and currently hold above that level in what otherwise has been a quiet day.

 

Today’s data

Actual = A Consensus = C  Previous = P Timings GMT

JPY         Tankan Large Manufacturers Index Q2 A 4 | C 4 | P -8

JPY         Tankan Non-Manufacturing Index Q2 A 12 | C11 | P 6

AUD       TD Securities Inflation M/M Jun A 0.00% | P 0.20%

CNY        Manufacturing PMI Jun A 50.1 | C 50.1 | P 50.8

CNY        HSBC Manufacturing PMI Jun (F) A 48.2 | C 48.3 | P 49.2

07:30     CHF        SVME-PMI Jun C 52.5 | P 52.2

08:00     EUR        Eurozone PMI Manufacturing Jun (F) C 48.7 | P 48.7

08:30     GBP       PMI Manufacturing Jun C 51.3 | P 51.3

08:30     GBP       Mortgage Approvals May C 56K | P 53.7K

08:30     GBP       M4 Money Supply M/M May C 0.00% | P 0.30%

09:00     EUR        Eurozone CPI Estimate Y/Y Jun C 1.60% | P 1.40%

09:00     EUR        Eurozone Unemployment Rate May C 12.30% | P 12.20%

14:00     USD       Construction Spending M/M May C 0.60% | P 0.40%

14:00     USD       ISM Manufacturing Jun C 50.6 | P 49

14:00     USD       ISM Prices Paid Jun C 50.5 | P 49.5

 

Ranges as of 6am London time including Sydney open

Highs    Lows

USD/JPY               99.55 | 99.18

EUR/USD             1.3033 | 1.3004

EUR/JPY               129.48 | 129.10

AUD/USD            0.9189 | 0.9110

NZD/USD             0.7780 | 0.7690

USD/CAD             1.0530 | 1.0502

EUR/CHF              1.2315 | 1.2295

USD/CHF             0.94575 | 0.9439

GBP/USD             1.5222 | 1.5201

EUR/GBP             0.8561 | 0.85515

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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