Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 98.956 | EURUSD 1.30965 | EURJPY 129.605 | AUDUSD 0.91883 | NZDUSD 0.7841 | USDCAD 1.03655 | EURCHF 1.24032 | USDCHF 0.9472 | GBPUSD 1.51838 | EURGBP 0.86245 |

 

Harry Hindsight

  • EUR: A lively end to NYK after Bernanke comments left the market opening around 1.2890, and we didn’t stop there with a short pause the market continued rising and taking out a number of stop levels driving through any offers available as the market tried to keep up with the correction in the market, we only really called it a day once we’d reached above 1.3200 having risen from 3yr lows early in the previous day’s session. We drifted from the highs with heavy trading continuing in the market as margin calls hit and while the market dipped to below the 1.3070 area in midsession we again started a move back above the 1.3100 and held 1.3145 areas into the grey hours. East Europeans were seen entering the sell side and sold the market again to the 1.0350. London ran the market a little lower to around the 1.3015 areas before holding for a good portion of the day around 1.3050, at the NYK cut for options we started to see delta and gamma players taking back short positions and the market rallied to above the 1.3100 into the close in NYK. The general consensus of what Bernanke said is that nothing really changes and if you look at it the two main criteria for QE are counter to each other with inflationary pressures requiring a reduction in cash in the economy while job creation requires more cash into the economy, so overall what he said means very little and tapering is in more likelihood to happen.
  • GBP: Cable was trading above 1.5000 having moved quickly just before the close and by the time we hit the Tokyo market we were just short of the 1.5200 area having triggered plenty of stops along the way. There was a mid-session sag as with the Euro dipping to below 1.5100 before recovering to above 1.5150 into the grey hours, from there the market consolidated around the 1.5100 level. From the NYK cut the market started to rally once more pushing to just above the 1.5200 level taking out some weak stops before drifting into a close around the 1.5180 area.
  • JPY: The USDJPY was the leader in the selloff of USD’s with the initial drop in NYK leaving the market to open around the 99.60. With a brief pause the market started to decline again in the period before Tokyo opening tumbling through several levels to halt just short of 98.20, we then saw a bounce as the market corrected itself, moving to above the 99.60 before again starting to tumble after a decent machine orders number and again running to 98.30 before holding around the 98.60 into the grey hours and rising as we moved closer to the London official open. After a couple of hours in London the market had moved back above 99.40 and ranged for a few hours between there and 99.20. Once we moved into the NYK session we again started to see sellers of USD’s appear this time led by Futures buyers in the Yen however, the dip was not as severe and having hit 98.60 the market started to move back and so it ran for the remainder of the day with an ever decreasing range into the close near to the 99.00, with real money types seen buying on the dips verses leverage types selling.
  • AUD: The Oz had lagged behind the other pairs into the close in NYK moving only 60 pips or so higher into the NYK close, opening around the 0.9170 area the market again started to move higher in the face of AUDJPY selling as retail Japan suddenly found themselves on call, this didn’t stop the AUD rally and we moved quickly to just short of 0.9300 and then reversing into the Tokyo opening trading down to below 0.9210. From there the market then started a slow rally higher with AUDJPY selling still occurring as the Oz rose against the USD, as we reached the grey hours the pair traded through the 0.9300 banging into some decent sized offers that held. Having rejected the level the market dropped quickly onto the London opening with leveraged types selling on the opening and dropping the market 60 pips. We then spent the rest of the day slowly declining in a tight channel through London into the NYK session to 0.9120 more or less where the whole move started. We consolidated here or paused for breath whichever way you look at it the move over the past 20hrs had ripped through most of the levels and only as we moved towards the end of the day did the market start to rise pushing to above 0.9190 into the NYK close. A total mixture of players were involved with some profit taking appearing once the market had moved to the downside again late in the session, with Japanese retail selling to cover margin calls in the carry trade and the usual leverage types selling towards the highs before covering later in the day for a healthy day.

Yesterday’s premiership results

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

NZD       Business NZ Manufacturing Index Jun A 54.7 | P 59.2

JPY         Machine Orders M/M May A 10.50% | C 1.70% | P -8.80%

AUD       Consumer Inflation Expectation Jul A 2.60% | P 2.30%

AUD       Employment Change Jun A 10.3K | C 0.0K | P 1.1K | R 0.7K

AUD       Unemployment Rate Jun A 5.70% | C 5.60% | P 5.50%

CAD       New Housing Price Index M/M May A 0.10% | C 0.30% | P 0.20%

USD       Import Price Index M/M Jun -0.20% | C 0.00% | P -0.60%

USD       Initial Jobless Claims (JUL 6) A 360K | C 335K | P 343K

USD       Monthly Budget Statement Jun A 116.5B | C 115.0B | P -59.7B

 

For today

USDJPY:
Topside: 99.20-99.50 light mix 99.50-99.80 light buy stops 99.80-100.00 medium offers
Downside: 98.40-98.70 light bids 98.10-98.40 light sell stops 97.20-97.40 light sell stops

EURUSD:
Topside: 1.3120-1.3150 medium offers 1.3150-1.3180 light buy stops 1.3200-1.3220 medium offers
Downside: 1.3040-1.3070 light sell stops 1.2980-1.3040 light bids

AUDUSD:
Topside: 0.9280-0.9320 medium offers 9320-9350 medium stops
Downside: 0.9100-0.9130 light sell stops 0.9050-0.9020 light sell stops 0.8980-0.9000 medium bids

 

CNY:

China FinMin expects 7% growth in 2013-report

China May Cancel Lending Rate Floor: China Securities Journal

China moves to protect domestic shippers from foreign firms paper

China’s Economic Policies Haven’t Changed -Xinhua

AUD:

Australian Housing Finance +1.8% in May From April

NZD:

Non-residents holdings of NZ debt fall in June – RBNZ

N.Z. Wants 40% Increase in Exports to ASEAN by 2017, Key Says

 

  • EUR: It will not be a surprise if I say the market was fairly muted today after yesterday’s excitement, we opened just short of the 1.3100 level having slipped below in the run to the close. We traded quietly as we moved towards the Tokyo session and only started to get what movement there was once we moved to the Tokyo fix drifting to below 1.3080 as the market absorbed some EURJPY supply. From this point even though volumes have been reasonably high the movement has remained in a tight range moving around the 1.3090 level.
  • GBP: A dip into the NYK close moved the market back below the 1.5200 to open around the 1.5180 with the move slowly continuing into the Tokyo session to below 1.5170. Once the Tokyo fish was over with the market started to move back to the opening areas making a high just above 1.5188 before slowing even further if that was possible. We currently hold around the 1.5175 area.
  • JPY: USDJPY opened around the 98.90 level and slowly rose to just above the 99.00 level from the opening trading sideways into the Tokyo session from there we saw EURJPY selling on top of USDSJPY supply for the fix dipping to the first level of bids around 98.70 and once the fix passed the market turned smartly and moved over the next hour to above 99.30 as the market saw fresh buying in AUDJPY carry trade after the carnage cuts of yesterday. We currently hold around the 99.00 area as we move towards London, in a fairly quiet session.
  • AUD: Having seen the market rally into the closing in NYK the opening saw those gains reversed as analysts push out their belief that the economic situation is worsening, I for one tend to sit on the side lines with record shorts in the market a reoccurrence of yesterday’s moves are just as likely as a cut in interest rates at the next meeting. Given that we moved from the opening levels 0.9195 to push below 0.9140 in steady selling pressure particularly AUDJPY from local players rather than retail Japan which was then halted once Tokyo opened. With some comments from China about expected GDP with the nineteenth official to put a stamp on a different number this time 7.0% the market started to reverse its losses and we currently hold around the 0.9180 in quiet trading.

Today’s data

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

AUD       Home Loans May A 1.80% | C 2.20% | P 0.80%

JPY         Industrial Production M/M May (F) A 1.90% | C 2.00% | P 2.00%

09:00     EUR        Eurozone Industrial Production M/M May C -0.20% | P 0.40%

12:30     USD       PPI M/M Jun C 0.50% | P 0.50%

12:30     USD       PPI Y/Y Jun C 2.00% | P 1.70%

12:30     USD       PPI Core M/M Jun C 0.10% | P 0.10%

12:30     USD       PPI Core Y/Y Jun C 1.60% | P 1.70%

13:55     USD       U. of Michigan Confidence Jul (P) C 85 | P 84.1

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               99.33 | 98.67

EUR/USD             1.3100 | 1.3077

EUR/JPY               129.96 | 129.21

AUD/USD            0.9188 | 0.9134

NZD/USD             0.7879 | 0.7826

USD/CAD             1.0380 | 1.0361

EUR/CHF              1.2407 | 1.2385

USD/CHF             0.94805 | 0.9460

GBP/USD             1.5189 | 1.5169

EUR/GBP             0.8629 | 0.8622

 

Good luck

Andy

 

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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