Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 100.256 | EURUSD 1.3199 | EURJPY 132.32 | AUDUSD 0.91671 | NZDUSD 0.79301 | USDCAD 1.03127 | EURCHF 1.2375 | USDCHF 0.93755 | GBPUSD 1.53155 | EURGBP 0.86193 |

Harry Hindsight

• EUR: Euro’s trended lower During the Asian period with poor figures from CNY helping the USD move higher across the board, we opened around the 1.3225 level and struggled in a tight 5 pip range into the Tokyo session, the market slowly moving down through 1.3220 until the release of the numbers, we dropped from there to the 1.3200 level and then struggled into the London session holding on to the level. Grey hours saw another movement lower as early East Europeans joined in the selling in front of a plethora of macro-economic data all broadly speaking better than expected and the market moved quickly higher to top out above the 1.3250, the market drifted from the highs but could not penetrate below 1.3230 and started to rise again as NYK players started to appear in the market topping again at a similar level 1.3255 areas. The market again started to fall back with talk of “forward guidance” (the new word for ending QE) with a think tank making comments that Eurozone will probably start to move in the same direction as the US. Euro’s dropped back to the 1.3210 area before dropping further on late session selling to push to below 1.3180 with medium term funds seen lightening long positions. The market rose in late trading back to the 1.3200 level for a poor day for the Euro. There were rumours of a possible downgrade by Egan Jones do the round for Germany, while I can appreciate the Germans are literally funding southern Europe the fact they have a surplus each year of around €200B would seem to suggest to me that the rumours were started somewhere else.
• GBP: Cable opened around the 1.5380 level and holding a very tight range for a great portion of the early session until the CNY number moved the USD higher, Cable moved down to below 1.5360 and again went into a comatose for several hours, in the grey hours we saw the normal movements from early Europeans trading to the mid 1.5340’s, early numbers in Europe allowed the market to rise quickly pushing back to above 1.5390 levels, USD then started to move higher and we moved into a series of waves lower pushing to 1.5315 before beginning a minor recovery into the NYK session, as with previous days we saw a quick move lower around the NYK option cut suggesting the end of some overly large structures leaving the market moving quickly lower to trade the 1.5290. The market bounced for the close and we steadily finished the day 1.5315 areas. With analyst’s increasingly looking forward and suggesting “forward guidance” in the near future one should draw your own conclusions as to when this may or may not happen however, don’t hold your breath.
• JPY: USDJPY spent more or less the whole day rising back to previous levels above the 100.00, having opened around the 99.45 area it moved quietly into the early part of NYK before rising quickly once the CNY data was released, jumping from the base line area of 99.50 to above the 99.70 level then it was a slow climb to above the 100.00 as we moved into the London session before pausing as we moved into the NYK session. NYK bought early in the session taking the market above 100.40 and the market traded around the 100.20 level for the balance of the session.
• AUD: The market moved quietly into the session, opening around the mid 0.9290’s and pretty much holding the level into the CPI data with the release we saw the usual gyrations as algo’s sold the data dropping the market to below 0.9250 and then immediately bouncing to make the highs around the 0.9319, the rally was short lived as the data for CNY hit with a worse than expected number and the market again dropped to the lows, one supposes not a good day for anyone algo’s or leveraged buyers, the market then went to sleep again as we slowly traded towards the London session. London saw sellers enter the market dropping over the course of an hour or so to push stops below 0.9200 before holding above 0.9220 into the NYK session, the continuing rally in USDJPY began to tell on the AUD and the market again started to move lower pushing steadily to a low below 0.9140 with leveraged names seen as sellers. The market eventually settled above the 0.9160 levels.

Yesterday’s premiership results

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

NZD       Trade Balance (NZD) Jun A 414M | C 105M | P 71M

JPY         Trade Balance (JPY) Jun A -0.60T | C -0.58T | P -0.82T

AUD       CPI Q/Q Q2 A 0.40% | C 0.50% | P 0.40%

AUD       CPI Y/Y Q2 A 2.40% | C 2.50% | P 2.50%

AUD       CPI RBA Trimmed Mean Q/Q Q2 A 0.50% | C 0.50% | P 0.30%

AUD       CPI RBA Trimmed Mean Y/Y Q2 A 2.20% | C 2.10% | P 2.20%

AUD       CPI RBA Weighted Median Q/Q Q2 A 0.70% | C 0.50% | P 0.50%

AUD       CPI RBA Weighted Median Y/Y Q2 A 2.60% | C 2.40% | P 2.60%

CNY        HSBC Flash Manufacturing PMI Jul A 47.7 | C 48.5 | P 48.2

EUR        French PMI Manufacturing Jul (P) A 49.8 | C 48.8 | P 48.4

EUR        French PMI Services Jul (P) A 48.3 | C 47.5 | P 47.2

EUR        German PMI Manufacturing Jul (A) A 50.3 | C 49.2 | P 48.6

EUR        German PMI Services Jul (A) A 52.5 | C 50.7 | P 50.4

EUR        Eurozone PMI Manufacturing Jul (A) A 50.1 | C 49.1 | P 48.8

EUR        Eurozone PMI Services Jul (A) A 49.6 | C 48.7 | P 48.3

GBP       CBI Trends Total Orders Jul A -12 | C -13 | P -18

USD       New Home Sales Jun A 497K | C 484K | P 476K

USD       Crude Oil Inventories A -2.8M | C -2.5M | P -6.9M

 

For today

USDJPY:
Topside: 100.40-100.70 light offers 100.70-101.00 medium buy stops 101.00-101.30 light offers
Downside: 99.70-100.00 light bids 99.30-99.65 light mixed bag

EURUSD:
Topside: 1.3240-1.3270 light buy stops 1.3270-1.3300 light offers 1.3300-1.3330 medium sized buy stops
Downside: 1.3120-1.3150 light mix 1.3080-1.3100 light sell stops

AUDUSD:
Topside: 0.9180-0.9210 light offers 0.9210-0.9240 light offers
Downside:
0.9110-0.9130 medium sell stops 0.9080-0.9100 light bids

NZD:

RBNZ’s Wheeler says consumption increasing

Says rate rises depend on spill into inflation pressures

Rapid house price inflation in some locality’s

Does not want housing to compromise price stability

NZ growth uneven but more widespread

Growth in NZ economy picking up

Outlook remains mixed

NZ keeps key rate 2.5%

CNY:

China unveils measures to boost economy “mini stimulus”

AUD:

The drop in the AUD from its highs above 1.0600 is beginning to cause a lift in inflationary pressure

EUR:

Portugal first-half deficit well below bailout ceiling

French jobless claims hit new record in June

• EUR: Euro’s moved quietly lower from the opening levels around 1.3200 to below the 1.3190 before slowly rising again in quiet trading throughout the session to top the 1.3210 for just over a 20 pip range, we currently hold just above the 1.3200 level as we move towards London. No real names showing.
• GBP: With a similar range for the Cable moving to a low of 1.5306 from the 1.5315 only to recover to the 1.5329 level in some very quiet trading in the market. However, unlike the Euro the Cable is holding just below the highs as we move to London.
• JPY: The market opened around the 100.25 area and ran higher into the Tokyo fix trading above the 100.45 level with everyone seemingly side lined; retail players remain long for the moment. Once the fix was over the market tripped into light volume selling dropping steadily to the 100.00 area before holding.
• AUD: The Oz opened around the 0.9168 area and stumbled along for the first hour before starting to see selling appear in the market, as AUDNZD selling kicked in after the reasonably good numbers helped the NZD higher triggering stops along the way this in turn caused a domino effect tumbling into AUDJPY stops below 92.00 taking the pair to below 91.50. The Oz continued to fall down to below the 0.9130 level before finding some support and moving to the 0.9150 level where we currently hold as we head to London. Leveraged and Japanese Retail seen doing the most.

 

Today’s data

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

NZD       RBNZ Rate Decision A 2.50% | C 2.50% | P 2.50%

JPY         Corporate Service Price Y/Y Jun A 0.40% | C 0.60% | P 0.30%

08:00     EUR        German IFO – Business Climate Jul C 106.1 | P 105.9

08:00     EUR        German IFO – Current Assessment Jul C 109.7 | P 109.4

08:00     EUR        German IFO – Expectations Jul C 102.5 | P 102.5

08:00     EUR        Eurozone M3 Y/Y Jun C 3.00% | P 2.90%

08:30     GBP       GDP Q/Q Q2 (A) C 0.60% | P 0.30%

08:30     GBP       GDP Y/Y Q2 (A) C 1.4% | P 0.3%

08:30     GBP       Index of Services M/M May C 0.20% | P 0.20%

12:30     USD       Initial Jobless Claims (JUL 19) C 340K | P 334K

12:30     USD       Durable Goods Orders Jun C 1.10% | P 3.60%

12:30     USD       Durables Ex Transportation Jun C 0.50% | P 0.70%

 

Interbank Ranges as of 6am London time

Highs    Lows

EURUSD               1.3209 | 1.3188

GBPUSD               1.5329 | 1.5306

USDJPY                 100.45 | 100.00

USDCHF               0.9382 | 0.9368

AUDUSD              0.9163 | 0.9129

NZDUSD               0.7981 | 0.7960

USDCAD               1.0319 | 1.0302

EURCHF                1.2375 | 1.2369

EURGBP               0.8619 | 0.8614

EURJPY                 132.46 | 131.99

Good luck

Andy