Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 99.237 99.30-33 | EURUSD 1.30678 1.3068-73| EURJPY 129.686 1.2968-73 | AUDUSD 0.90502 0.9053-60 | NZDUSD 0.77736 0.7779-84 | USDCAD 1.03969 1.0389-94 | EURCHF 1.23634 1.2366-71 | USDCHF 0.9462 0.9453-58 | GBPUSD 1.51078 1.5107-12 | EURGBP 0.86494 0.8645-48 |

 

Weekend News

CNY:

Xinhua Corrects Report on Lou’s China Growth-Target Comments
China Almost Doubles Foreign Funds’ Access to Capital Markets
China to Promote Technology, Energy-Saving in Restructuring Push
China Evacuates 300,000 as Typhoon Soulik Makes Landfall
China City Cancels $6 Billion Uranium Plant After Protests
CNY/JPY/GBP:

China May Work With Japan on British Nuclear Plant, FT Reports
JPY:

Hamada Says Raising Sales Tax May Shock Japan Economy: Chunichi
Japan Government Says Defence Plan May Include Marines: Kyodo
Japanese Ministers Offer Tribute to Yasukuni Shrine: Chunichi
JPY/CNY/KRW:

Japan’s popularity dips among neighbours
AUD:

Rudd Seeks to Ditch Carbon Tax With Eye on Election Campaign
USD:

Fed’s Plosser Calls for Tapering of QE to Begin in September
Fed’s Bullard Opposes Tapering of QE Amid Slowing Inflation
Wells Fargo Joins JPMorgan in $6.5 Billion Equity Hit on Rates
EUR:

Greek Crisis Exit Depends on Primary Surplus, Imerisia Says

Greece Sees No Budget Gap in 2013-2014, Kathimerini Reports
GBP: More Britons Expect House-Price Gains in Next Year, Halifax Says
U.K. to Grow 1.1% on Consumer-Spending Growth, Item Club to Say

 

Harry Hindsight

  • EUR: The Euro opened around the 1.3100 area but failed to push any higher stalling several times in the early part of the session at this level, once Tokyo opened the market saw light EURJPY selling however we again returned to the topside to fail again, from this point the market started to slide away from the level trading down below 1.3080 into the mid-session after comments from the CNY FinMin on expected GDP, early Europeans were seen selling smalls during the grey period, and once we moved into London the market again broke lower trading to the 1.3040 level before holding into the Eurozone number with a lower IP figure making little difference to the market. NYK came in selling like the Europeans and we traded to mid-1.3020’s with Fitch downgrading France to AA+ before trading quietly into the US data, these came out worse than expected and USD started to move down on the back of the numbers and the Euro started a steady rise higher culminating in a small short squeeze to above the 1.3090 level before settling down into a tight range into the close around the 1.3070 with volumes back to the summer specials we’ve all come to expect.
  • GBP: Cable was already declining into the close in NYK drifting some 20 pips from above 1.5200 before reopening around the 1.5180 level; for the most part Cable remained quiet during the Asian session moving to below the 1.5170 during the Tokyo fix before moving back to the 1.5190 area and then drifting as we approached the grey hours. Early Europeans sold just before the London opening taking the pair to below 1.5140 and keeping the GBP in line with the decline in the Euro for the most part, we paused for a couple of hours before the opening in NYK and the announcement by Fitch and the Cable followed the Euro however having pushed to below the 1.5080 level the market was unable to rally with the Euro and could only manage a minor move higher pushing to 1.5130 and unable to break that level having attempted it on two separate occasions before slipping into a 1.5100-10 range into the close. EURGBP lost ground over the day having moved between 0.8615-0.8630 for the Asian and early London the rally in the Euro left the Cable languishing behind and the cross moved back to the mid-week 0.8650 levels into the close.
  • JPY: USDJPY had a reasonably choppy day with a follow through from the NYK close rally pushing the market from just below 99.00 to a few pips above before settling to a slow movement into the Tokyo open, the market traded some light EURJPY from the opening and this effected both the Euro and USDJPY leg taking the market to the lows below 98.70 before recovering as fixing demand offset the supply and forced the USDJPY higher pushing to above the 99.30 level before settling back again as the CNY FinMin comments turned the market, with good volumes of AUDJPY cross being sold. For the rest of Asia the market based off the 99.00 level and only in the grey hours did we see a deeper move extending through 98.90 before recovering the line into the London open. The downgrade by Fitch set the USD higher and USDJPY began a rise over the next couple of hours with good volumes pushing the market to around the 99.70 level into the near term offers before steadily drifting back for the US figures which turned the market the other way and the market dropped back to that 98.90 level. The market moved back to through the 99.00 level and Euro moved upwards taking the EURJPY cross with it and the USDJPY benefited from the move to trade into the close between the 99.30-40 for the most part.
  • AUD: The Oz steadily declined from the opening around 0.9190 trading to a low in Asia of 0.9140 on the CNY comments before recovering somewhat from mid-session onwards as a mixture of cross trading helped the Oz to move back above the 0.9180 level. Once we moved into the London session the decline started to deepen through the day falling off as we moved towards the NYK session with Macro sellers seen in particular on the move down from the 0.9060 level to touch just below the 0.9000 before bouncing back above 0.9040, from that point the market became becalmed and we moved around the 0.9060 level into the close settling around the 0.9050 levels.

 

Friday’s premiership results

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

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%

EUR        Eurozone Industrial Production M/M May A -0.30% | C -0.20% | P 0.40%

USD       PPI M/M Jun A 0.80% | C 0.50% | P 0.50%

USD       PPI Y/Y Jun A 2.50% | C 2.00% | P 1.70%

USD       PPI Core M/M Jun A 0.20% | C 0.10% | P 0.10%

USD       PPI Core Y/Y Jun A 1.70% | C 1.60% | P 1.70%

USD       U. of Michigan Confidence Jul (P) A 89.9 | C 85 | P 84.1

 

For today

USDJPY:
Topside: 99.40-99.70 light offers 99.70-100.00 light offers 100.80-101.00 light offers
Downside: 98.70-99.00 medium sell stops 98.40-98.70 light bids
EURUSD:
Topside: 1.3100-1.3130 light offers 1.3130-1.3160 light buy stops 1.3180-1.3200 medium bids
Downside: 1.3020-1.3060 light bids 1.3000-1.3020 light bids 1.2980-1.3000 medium bids

AUDUSD:
Topside: 0.9120-0.9150 light mix 0.9180-0.9200 light offers
Downside: 0.9020-0.9060 light bids 0.8940-0.8960 light bids

 

JPY:

Japan PM Shinzo Abe on track for hefty election win – polls

CNY:

China Q2 GDP up 7.5% YoY, in line with expectations

China has conditions to achieve full-year growth target-stats bureau

PBOC’s Zhou Xiaochuan Reiterates Prudent Monetary Policy

China to Maintain Stable Economic Policies, Focus on Development Quality

China Private Capital Investment Barrier Too High: Vice Premier

China June Monthly Retail Sales +13.3% on Year, +1.26% on Month

China Jan-Jun property investment up 20.3% YoY

China June Industrial Output +8.9% on Year; Market Expected +9.1%

China to Study Long-Term Policies to Curb Property: Info. Daily

NDRC Researcher Says China Faces Pressure in 2H: Securities News

China 1H GDP Growth May Be 7.6%: China Securities Journal

SGD:

Moody’s Changes Singapore’s Banking System Outlook to Negative

AUD:

Australia new vehicle sales jump 4% to record in June

NZD:

New Zealand services activity eases in June – survey

 

 

  • EUR: The market opened slightly higher from Friday’s close and traded to above 1.3076 on the opening before slowly sliding down in early trading into the Tokyo session, once Tokyo opened it seemed the market had found its levels and struggled from the 1.3055 area slowly higher before jumping higher to the 1.3076 area again as the CNY GDP and other figures came in slightly better than expected helping the Oz and as a by-product Euro higher before settling into a tight quiet range for the remainder of the session heading towards London around the 1.3070 level.
  • GBP: We opened in line with Fridays close and as with the Euro slipped a little lower from the opening holding the 1.5100 level before following the Euro slightly higher once the CNY data was out of the way. We currently hold around the 1.5120 level with very little interest in GBP for the moment. With only the rightmove figure showing, with very little interest in the number although it was better than expected.
  • JPY: USDJPY remained fairly quiet opening slightly higher from Friday we moved quickly down in pre-Tokyo trading from the 99.38 level to touch 99.18 and finding a base for the greater part of the session, the market moved into the fix with some light demand but nothing earthshattering and apart from a brief selling period after the CNY numbers the USDJPY has remained in the 99.20’s and looks to be holding that level into London. With a bank holiday in Japan (Marine Day) the market has been particularly calm.
  • AUD: After opening better than Friday’s close the market moved sideways into the Tokyo session trading to above the 0.9090 level before dipping down to trade below 0.9060 just before the CNY numbers as specs took a gamble on the number being worse than expected. The rest is history as they say and we saw the market move quickly triggering weak stops from those shorts to touch above the 0.9110 level before drifting back to the 0.9090 level, the market seemed set from that point to be a quiet move towards London however, as we moved towards the Grey hours the market caught bids from early risers in Europe and the Middle East to push above the 0.9100 again and trigger further stops to above the 0.9115 level.

 

Today’s data

Actual = A Consensus = C  Previous = P Timings GMT

GBP       Rightmove House Prices M/M Jul A 0.30% | P 1.20%

CNY        Real GDP YTD Y/Y Q2 A 7.50% | C 7.70% | P 7.70%

CNY        Industrial Production Y/Y Jun A 8.90% | C 9.10% | P 9.20%

CNY        Retail Sales Y/Y Jun A 13.30% | C 12.90% | P 12.90%

07:15     CHF        Producer & Import Prices M/M Jun C 0.20% | P -0.30%

07:15     CHF        Producer & Import Prices Y/Y Jun C 0.30% | P -0.20%

12:30     USD       Empire Manufacturing Jul C 5 | P 7.84

12:30     USD       Advance Retail Sales Jun C 0.70% | P 0.60%

12:30     USD       Retail Sales Less Autos Jun C 0.40% | P 0.30%

14:00     USD       Business Inventories May C 0.20% | P 0.30%

 

Ranges as of 6am London time including Sydney open

Highs    Lows

USD/JPY               99.50 |  99.055

EUR/USD             1.30865 | 1.3053

EUR/JPY               130.09 | 129.415

AUD/USD            0.9119 | 0.905

NZD/USD             0.7820 | 0.7784

USD/CAD             1.0399 | 1.0382

EUR/CHF              1.2370 | 1.2360

USD/CHF             0.9473 | 0.9458

GBP/USD             1.5129 | 1.5098

EUR/GBP             0.8647 | 0.86415

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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