Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 100.627 | EURUSD 1.29788 | EURJPY 130.602 | AUDUSD 0.91479 | NZDUSD 0.77459 | USDCAD 1.05447 | EURCHF 1.23372 | USDCHF 0.95058 | GBPUSD 1.51552 | EURGBP 0.85641 |

 

Harry Hindsight

  • EUR: The market opened around the 1.3070 area and struggled in a quiet market through Asia, moving to a low of 1.3050 and a high just above the 1.3075 level with summer holidays biting into the volumes across the board, we had to wait until the London market opened before we started to see movement. With concerns rising in the Eurozone over whether or not the Greeks are meeting their targets and whether the next tranche of payments is under threat, the market started to decline from the highs as soon as we opened dropping initially to the 1.3060 level were we saw some real money bids before dropping again on the PPI releases for the Eurozone with worse than expected figure on the monthly figure sending the market to the 1.3030 mark. We traded from there in a 1.3020-30 range into the NYK session and saw early sellers appearing from the opening taking the market to below the 1.3000 area before rejecting the level, while there was a bounce one has to say it was short lived and couldn’t break convincingly above the 1.3030 level before renewing the move lower. US factory orders were in line with expectations and passed with barely a murmur before the USD started to rise against everything and the Euro found itself the wrong side of 1.3000 and triggering some weak stops from Macro and leverage types who’d attempted to pick the bottom the quick nasty drop took the market to the mid 1.2960’s before recovering to the 1.2980 level into the close.
  • GBP: Cable traded very quietly in Asia with very little movement opening around the 1.5220 level it was unable to make any headway and drifted to a low around the 1.5205 level before dipping below as we hit the grey hours, from the low the market recovered quickly into the London opening and we saw real money enter the market for the first notable time this week however, once that demand had run its course the market again started to drift lower into the PMI number which was weaker than expected and the market moved quickly back to the lows from just short of 1.5240. As with the Euro there was a short period of consolidation around the 1.5200 mark before early NYK selling entered the market and Cable dropped quickly to the 1.5140 area. While the market did try to put in a rally before the London close it was smothered by a succession of IMM selling entering the market and we dipped again to the lows from just below 1.5180, we finished the day just off the lows and holding just above the 1.5150 level.
  • JPY: Asia struggled with USDJPY opening just below 99.70 and the 100.00 level firmly in its sights the market could barely move above the 99.70 level and once the RBA announcement came out with marked comments about the AUD movement likely to continue southwards we saw some light AUDJPY selling as Japanese retail players closed some of their longs, we traded around the 99.60 area for most of the session making a low just above the 99.50 level early in the session. With the Oz trading lower we saw the USDJPY move a little higher into the Tokyo lunch and as we moved towards the grey hours moved properly above the 99.70 level. The move continued as we moved to London touching above 99.90 and running into widespread offers in the market which contained the rise and gave the Macro types time to go short however, while the market moved back into its previous 99.60-70 area it was soon back above 99.70 and NYK opened with the market moving quickly through the 100.00 level and causing a little short squeeze, trading to above 100.40 initially before triggering further buying from delta and gamma hedging from the banks touching above 100.70. We held in the area for a couple of hours as the bids remained intact as supply slowly came to market before moving off 25 pips and then slowly rising into the close above 100.60.
  • AUD: The Oz opened around the 0.9240 area and although the early part of the session was very quiet the market rising to the 0.9250 level, we started to drift lower the closer to the RBA announcement falling to the 0.9210 level and holding in the region into the decision, sparking higher on no change as HFT took the market before the obligatory comments which then forced the market lower hitting the 0.9160 level quickly following warnings over a weakening in the Oz by the RBA. The market then limped into the grey hours and once we moved into London started to recover as bottom pickers started entered the market. We managed to crawl back to the 0.9210 level and then started a long deep drift into the NYK session trading to below the 0.9140 area into early NYK, there were minor rallies during the futures session but each was met by resistance and the market then settled into a tight range around the 0.9140 level with the low just above 0.9130 and holding into the close.

Yesterday’s premiership results

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

JPY         Monetary Base Y/Y Jun A 36.00% | C 41.20% | P 31.60%

JPY         Labour Cash Earnings Y/Y May A 0.00% | C 0.60% | P 0.30% | R 0.00%

AUD       RBA Rate Decision A 2.75% | C 2.75% | P 2.75%

GBP       PMI Construction Jun A 51 | C 51.3 | P 50.8

EUR        Eurozone PPI M/M May A -0.30% | C -0.20% | P -0.60%

EUR        Eurozone PPI Y/Y May A -0.10 % | C -0.30% | P -0.20%

USD       Factory Orders May A 2.10% | C 2.10% | P 1.00%

For today

USDJPY:
Topside: 100.85-101.10 light buy stops 101.10-101.40 light offers 101.40-101.70 light offers
Downside: 100.10-100.40 light mix 99.80-100.10 light sell stops 99.50-99.80 light mix

EURUSD:
Topside: 1.3040-1.3070 medium mix 1.3070-1.3100 light buy stops 1.3100-1.3130 light offers
Downside: 1.2930-1.2960 light mix 1.2900-1.2930 light bids 1.2880-1.2900 medium bids

EURJPY:
Topside: 131.20-131.50 light offers 131.50-131.90 light offers
Downside: Nothing of note.
AUDUSD:
Topside: 0.9190-0.9200 light offers 0.9220-0.9260 light stops

Downside: 0.9060-0.9000 light bids

 

AUD: Australia’s CB ready to act further as mining boom peaks

Australian home prices rising gently, not serious – RBA

Australian May Retail Sales +0.1% vs. +0.3% Consensus

Australia new homes sales rise to 18mth high in May-HIA

Australia May trade surplus A$670M

JPY:

Japan’s Abe to Consider April-June Stats When Deciding Sales Tax

CNY: China June official services PMI at 53.9 vs. 54.3 in May

HSBC China June Services PMI 51.3 vs. 51.2 in May

China cabinet approves re-launch of Govt bond futures paper

 

 

  • EUR: Euro’s opened around the 1.2955 level and struggled higher in early trading, once Tokyo opened the market saw several rounds of EURJPY selling nothing large but continual to move the market below 1.2965 in a reasonably quiet session, for the moment with no one in particular showing we hold around the 1.2970 levels having seen the losses reversed in EURAUD leveraged buying.
  • GBP: Cable was very quiet during the session with the Oz dominating the market leaving the pair struggling in the early part before moving up from the lows just above 1.5140 through the opening 1.5157 to touch above 1.5160 in reply to the Oz’s initial rally. We have since drifted lower and hold only just above the lows for the day.
  • JPY: USDJPY held in a 30 pip range broadly speaking, with an early rise into the Tokyo opening from 100.65 to above the 100.80 level before slipping back into the Tokyo fix supply, The move continued and we eventually saw some weak spec selling of the AUDJPY and the market held around the 100.50 level for a couple of hours before starting a long drawn out move back towards that 100.80 area, we currently hold around the 100.70 area as we move to London.
  • AUD: The Oz market moved into the Tokyo session in almost the same fashion that it finished the NYK session holding the 0.9140 level for several hours after the open, the figures balanced each other with the trade balance coming in much better than expected with a worse than expected retail sales number, comments from China about data consistent with the 7.5% GDP helped the market move to the 0.9190 area however, resting offers deterred any further move high and we dropped to the 0.9160 area to hold until RBA Gov. Stevens came on the wire with several dovish comments which sent the Ozzie lower again trading for the first time in 3yrs to below 0.9100 before holding around the 0.9110 level.

Today’s data

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

GBP       BRC Shop Price Index Y/Y Jun A -0.20 | P -0.10%

AUD       Trade Balance (AUD) May A 0.67B | C 0.05B | P 0.03B

AUD       Retail Sales M/M May A 0.10% | C 0.40% | P 0.20%

08:00     EUR        Eurozone PMI Services Jun (F) C 48.6 | P 48.6

08:30     GBP       PMI Services Jun C 54.6 | P 54.9

09:00     EUR        Eurozone Retail Sales M/M May C 0.40% | P -0.50%

11:30     USD       Challenger Job Cuts Y/Y Jun P -41.20%

12:15     USD       ADP Employment Change Jun C 161K | P 135K

12:30     CAD       International Merchandise Trade (CAD) May C -0.7B | P -0.57B

12:30     USD       Trade Balance May C -40.3B | P -40.3B

12:30     USD       Initial Jobless Claims (JUN 29) C 345K | P 346K

14:00     USD       ISM Non-Manufacturing Composite Jun C 54.3 | P 53.7

14:30     USD       Crude Oil Inventories P 0.0M

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               100.86 | 100.45

EUR/USD             1.2984 | 1.2966

EUR/JPY               130.825 | 130.32

AUD/USD            0.9190 | 0.9094

NZD/USD             0.7779 | 0.7732

USD/CAD             1.0555 | 1.0530

EUR/CHF              1.2347 | 1.2320

USD/CHF             0.95245 | 0.95005

GBP/USD             1.5163 | 1.5144

EUR/GBP             0.85655 | 0.85595

 

 

Good luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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