Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 99.847 | EURUSD 1.3063 | EURJPY 130.434 | AUDUSD 0.9099 | NZDUSD 0.78129 | USDCAD 1.04272 | EURCHF 1.2387 | USDCHF 0.94829 | GBPUSD 1.51008 | EURGBP 0.86511 |

 

Harry Hindsight

  • EUR: The opening in Asia was in line with the close on Friday more or less and we opened above the 1.3070 level before slowly drifting lower into the early part of the Tokyo market with EURJPY selling seen from some exporters before the fix, once the movement was over with we saw some light buying throughout the remainder of the session in Tokyo and the market slowly rose to just short of the 1.3080 level from the 1.3055 lows. The grey hours saw the usual East European, Middle East players enter the market with Portugal again weighting heavy on the Euro and the early sellers push the market through Asia’s lows and although we found some support just above the 1.3040 level it was short lived as the follow on to France’s downgrade by Fitch saw them announcing a similar downgrade of the EFSF to AA+ from AAA has to be some little slight to the Germans in there, this again to the market lower and we struggled for a while around the 1.3020 level before that level broke and we trade below 1.3000 for the day. As it was having hit the lows the US data releases started to appear and with retail sales falling short of last month’s number and expectations the market was reversed sharply higher moving quickly to the 1.3050 level and then forcing its way through as USD weakened across the board. Saying that while the volumes were not poor they are in line with summer trading as can be seen by a 1 big figure range on two pieces of news that could have done far worse, the market then slowly moved to a close just above the 1.3060 levels.
  • GBP: Cable moved from the opening areas around 1.5120 to touch the 1.5100 level a number of times during the Asian session without managing to do any damage, we rose slowly to just short of 1.5130 into the grey hours where we saw the Cable follow the movement of the Euro and then some light buying in EURGBP to take the pair down to the 1.5040 level over the course of the grey hours and a couple of hours into London, we held the area until the NYK session started before another final attempt lower stalling this time at 1.5030, and the whole move seemed rather lacklustre and one suspects the GBP just followed the Euro with some natural orders exaggerating the move with light liquidity. Once NYK opened and the USD fell out of bed the market swiftly moved back above the 1.5100 level and then struggled to make headway from that point again indicating a lack of interest in GBP in general with the market finishing just in the red for the day.
  • JPY: With a Japanese bank holiday (Marine day) movement was limited, and we traded slowly down from the opening levels just short of 99.40 staying in a 99.20-30 band for much of the session with only a brief spike lower to below 99.10 in mid-session. Once we moved into the London session USD was fairly strong and we saw the market move in a tight channel with macro and leveraged types buying throughout the session, the market topped out just before the numbers trading just short of 100.50 with some minor breakout players taking interest before the retail sales numbers put paid to the USD move. We slumped back to the 99.80 level and then struggled for the remainder of the session for any particular movement in either direction to finish the day around the 99.90 areas.
  • AUD: The Oz struggled in early trading in front of long awaited GDP and IP numbers out of China, having opened around the 0.9080 level the market traded below 0.9060 before the numbers came out more or less in line with expectations given the amount of speculation over the past few days about the 7% call several Chinese officials had been chanting this in effect made the figures look pleasing and we saw the market move to above 0.9100 and then struggle a little higher in the grey hours to top out above the 0.9120 level. The move into London were players looked at the numbers without the hype made the decision to sell into the rally the selling was short lived and we again moved towards the highs before USD started to rise strongly forcing the Oz below 0.9040, from there though the poor numbers out of the US coupled with some Gama trading saw the market move to 0.9090 quickly then a steady rise to the 0.9100 area into the close.

Yesterday’s premiership results

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

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%

CHF        Producer & Import Prices M/M Jun A 0.10% | C 0.20% | P -0.30%

CHF        Producer & Import Prices Y/Y Jun A 0.20% | C 0.30% | P -0.20%

USD       Empire Manufacturing Jul A 9.5 | C 5 | P 7.84

USD       Advance Retail Sales Jun A 0.40% | C 0.70% | P 0.60%

USD       Retail Sales Less Autos Jun A 0.00% | C 0.40% | P 0.30%

USD       Business Inventories May A 0.10% | C 0.20% | P 0.30%

 

For today

USDJPY
Topside: 100.10-100.30 light offers 100.30-100.60 medium offers 101.00-101.20 light offers
Downside: 99.40-99.70 light bids 99.00-99.30 medium sell stops

EURUSD
Topside: 1.3080-1.3100 light buy stops 1.3100-1.3140 light mix 1.3180-1.3200 medium offers
Downside: 1.3000-1.3030 light bids 1.2970-1.3000 medium sell stops 1.2940-1.2970 light bids

AUDUSD
Topside: 0.9175-0.9200 decent buy stops 0.9250-0.9275 light offers
Downside: 0.9070-0.9090 light mix 0.9000-0.9030 light bids 0.8950-0.8980 light bids

 

AUD: Australia’s RBA: Tame Inflation Allows Room To Cut Rates If Needed

Australia plans to scrap carbon tax, bring forward ETS scheme

Glencore says to suspend Australia iron ore mining, citing poor outlook

JPY:

Amari: Will Do Utmost to Create Environment for Sales Tax Rise

CNY:

China Can Tolerate Slower Growth: Securities Journal Editorial

Asia:

ADB Trims Developing Asia’s Growth Forecasts on China Slowdown

 

  • EUR: We opened around the 1.3060 area and struggled in early trading with a small selloff from the then highs of 1.3068 to the 1.3055 area just before the Tokyo opening with some light EURJPY and EURUSD selling making an appearance, once into Tokyo we moved off the lows and started a steady move to above the 1.3070 level and then maintained a 1.3060-70 range for several hours befor3e making its way back above the 1.3070 area where we have traded around for the balance of the session in ever decreasing volume. We currently hold on the highs 1.3075 as we move to London.
  • GBP: Cable was very quiet with more or less a 20 pip range defining the day, no real movement per sae and more a follow the Euro to some extent, early trading saw the pair move to the 1.5092 area before moving into Tokyo and picking up to trade to just below the 1.5120 level, we currently hold around the 1.5110 level with some light support seen around the 1.5100.
  • JPY: With a full complement of trading desks and retail clients the USDJPY found early support taking the market higher from the 99.85-90 opening area to couch above the 100.05 level into the early part of Tokyo however the market again struggled with interest with the JPY strengthening later in the session as the RBA announcement allowed Oz higher, with AUDJPY offers in the market the USDJPY was forced lower to the 99.65 level and currently holds around the 99.75 area as we head into London. Apart from some early EURJPY selling from exporters the only other pair showing was AUDJPY.
  • AUD: The Oz opened around the 0.9100 level and traded quietly until just before the Tokyo opening when we saw some strong selling taking the market down to just below 0.9090 with comments out of China that they could tolerate slower growth. We held this level then until we heard from the RBA with the minutes from the last meeting, with PM Rudd reiterating some of the weekend news on the tapes the market moved to above 0.9140 in a quick move before again drifting slowly lower, we triggered some weak stops in the move and more than likely not those that initially shorted on the China news. From there we drifted lower again to 0.9110 before the RBA started to speak, with more of the same as we’ve had previously with more of a loose threat to cut interest rates implied than said with inflation outlook giving some scope for easing, and policy appropriate in reference to previous cut. The market moved quickly to the topside with AUDJPY selling entering the market to match off and push USDJPY lower while AUD moved to above the 0.9170 area the dip was shallow and short lived when it appeared and we currently hold above the 0.9170 level as we had to London having touched briefly the 0.9180.


Today’s data

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

NZD       CPI Q/Q Q2 A 0.20% | C 0.30% | P 0.40%

08:30     GBP       PPI Input M/M Jun C -0.20% | P -0.30%

08:30     GBP       PPI Input Y/Y Jun C 4.20% | P 2.20%

08:30     GBP       PPI Output M/M Jun C 0.10% | P 0.00%

08:30     GBP       PPI Output Y/Y Jun C 1.90% | P 1.20%

08:30     GBP       PPI Output Core M/M Jun C 0.10% | P 0.10%

08:30     GBP       PPI Output Core Y/Y Jun C 1.10% | P 0.80%

08:30     GBP       DCLG UK House Prices Y/Y May C 2.80% | P 2.60%

08:30     GBP       CPI M/M Jun C -0.10% | P 0.20%

08:30     GBP       CPI Y/Y Jun C 3.00% | P 2.70%

08:30     GBP       Core CPI Y/Y Jun C 2.30% | P 2.20%

08:30     GBP       RPI M/M Jun C 0.00% | P 0.20%

08:30     GBP       RPI Y/Y Jun C 3.40% | P 3.10%

09:00     EUR        Eurozone CPI M/M Jun C 0.10% | P 0.10%

09:00     EUR        Eurozone CPI Y/Y Jun (F) C 1.60% | P 1.60%

09:00     EUR        Eurozone CPI – Core Y/Y Jun (F) C 1.20% | P 1.20%

09:00     EUR        Eurozone Trade Balance (EUR) May C 16.2B | P 16.1B

09:00     EUR        German ZEW Survey (Economic Sentiment) Jul C 40 | P 38.5

09:00     EUR        German ZEW Survey (Current Situation) Jul C 9 | P 8.6

09:00     EUR        Eurozone ZEW Survey (Economic Sentiment) Jul C 31.8 | P 30.6

12:30     CAD       Manufacturing Shipments M/M May C 1.00% | P -2.40%

12:30     USD       CPI M/M Jun C 0.30% | P 0.10%

12:30     USD       CPI Y/Y Jun C 1.60% | P 1.40%

12:30     USD       CPI Core M/M Jun C 0.20% | P 0.20%

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

13:00     USD       Net Long-term TIC Flows May C 14.3B | P -37.3B

13:15     USD       Industrial Production Jun C 0.30% | P 0.00%

13:15     USD       Capacity Utilization Jun C 77.90% | P 77.60%

14:00     USD       NAHB Housing Market Index Jul C 51 | P 52

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               100.07 | 99.64

EUR/USD             1.3076 | 1.3053

EUR/JPY               130.65 | 130.32

AUD/USD            0.9173 | 0.9087

NZD/USD             0.7836 | 0.7794

USD/CAD             1.0442 | 1.0423

EUR/CHF              1.23965 | 1.2385

USD/CHF             0.9490 | 0.9475

GBP/USD             1.5116 | 1.5091

EUR/GBP             0.8654 | 0.8648

 

Good luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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