Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 97.88 | EURUSD 1.33019 | EURJPY 130.212 | AUDUSD 0.89843 | NZDUSD 0.8011 | USDCAD 1.02765 | EURCHF 1.23212 | USDCHF 0.92625 | GBPUSD 1.52078 | EURGBP 0.87472 |

 

Harry Hindsight

  • EUR: Opened in Asia around the 1.3260 levels and flat lined for the most part touching above 1.3265 and only breaking through the 1.3255 level on the move into the grey hours touching to 1.3240, falling in line with the German retail numbers. After the numbers the market wouldn’t stay down moving against expectations to rally to the 1.3300 on buying pressure triggering weak stops above the 1.3270 level. Then next trench of numbers were in line if not slightly better than expected with Italian unemployment coming in better than expected at 12.1% when the consensus was expected to be 0.1% worse and came in better. The market is a buzz with ECB council meetings being disclosed however, I don’t think it makes a difference one way or the other as most of them can’t spell. The Market again started to drop off from the highs moving to below 1.3250 as pre FOMC selling started to kick in. US numbers kicked in with a good ADP number starting a quick drop to the 1.3210 level before bouncing and holding around the 1.3220. The next set of numbers were mixed however, with changes in the way they calculate the GDP the market expected a higher number however, the lower price index would suggest that may not have been the case otherwise. The FOMC meeting left the USD vulnerable as talk of 2% inflation may limit the tapering expected to start next month, the Euro moved higher quickly to above the 1.3340 level triggering more stops above the level before dropping back towards the 1.3300 level.
  • GBP: Cable remains on the weak side still and one has to wonder whether something changed that we missed as the fundamentals have not changed in the past week. The only part is the next minutes to see if the stance really changed or not with the new Governor. We opened around the 1.5238 level and traded quietly with the Euro during the best part of the Asian session. Moving with the Euro into London before dropping away to below 1.5130, the Euro extended its gains in the cross moving higher into the 0.8700 handle moving close to the 0.8770 level. With the FOMC and numbers in the US the Cable made gains moving to above the 1.5250 recapturing all its losses on the day only to drop back to the 1.5210 for another poor day, but then it’s all about perspectives and a weaker GBP works for the economy.
  • JPY: USDJPY opened around the 98.05 area and struggled in a tight range throughout the Asian session hitting a low during the Tokyo fix below 97.90 before recovering and holding just above the 98.00 level. The move into the grey markets saw early Europeans keen to sell USD’s and we saw the market drop to 97.80, once the European numbers had been release the market moved to a low around 97.60 and that’s where the market held with some decent support showing up in front of the numbers in the US. The release of those numbers saw a quick jump higher to above 98.50 triggering weak stops and then holding around the 98.30 level for a good portion of the session, before the FOMC dovish comments returned the USD close to its lows against everything. With USDJPY hitting below 97.70 before bouncing to 97.90 into the close.
  • AUD: The Oz opened around the 0.9065 level and struggled into the Tokyo session touching around the 0.9070 level before technical traders moved in with pivotal and breakout points the talk of the market however, even now with so much short positioning a move higher would probably catch a lot of those positions by surprise and although the market isn’t seeing too much in stops showing! We dropped lower to below 0.9020 as EURAUD buying and AUDJPY selling moved into the market, before holding and bouncing around the 0.9030 level deep into the London market. With the move in the Euro the market in Oz was forced lower as profit taking/stops were triggered in the EURAUD cross and we saw the Oz pushed quickly to below the 0.9000 level triggering stops in the straight pair to touch below 0.8950 and still room for another extension, the move higher on the back of the dovish FOMC had limited impact with the Oz only pushing to above 0.9000 again before dropping to 0.8980 into the close.

 

Yesterday’s premiership results

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

GBP       BRC Shop Price Index Y/Y Jul A -0.50% | P -0.20%

GBP       GfK Consumer Sentiment Jul A -16 | C -19 | P -21

JPY         Nomura/JMMA Manufacturing PMI Jul A 50.7 | P 52.3

NZD       ANZ Business Confidence Jul A 52.8 | P 50.1

JPY         Labour Cash Earnings Y/Y Jun A 0.10% | C 0.10% | P 0.00% | R -0.10%

JPY         Housing Starts Y/Y Jun A 15.30% | C 16.00% | P 14.50%

EUR        German Retail Sales M/M Jun A -1.50% | C 0.20% | P 0.80% | R 0.70%

CHF        UBS Consumption Indicator Jun A 1.44 | P 1.46 | R 1.45

CHF        KOF Leading Indicator Jul A 1.23 | C 1.22 | P 1.16 | R 1.15%

EUR        German Unemployment Change Jul A -7k | C 0K | P -12K | R -13K

EUR        German Unemployment Rate Jul A 6.80% | C 6.80% | P 6.80%

EUR        Eurozone CPI Estimate Y/Y Jul A 1.60% | C 1.60% | P 1.60%

EUR        Eurozone Unemployment Rate Jun A 12.10% | C 12.20% | P 12.10%

USD       ADP Employment Change Jul A 200K | C 180K | P 188K | R 198K

CAD       GDP M/M May A 0.20% | C 0.30% | P 0.10%

USD       Employment Cost Index Q2 A 0.50% | C 0.40% | P 0.30%

USD       GDP (Annualized) Q2 (A) A 1.70% | C 1.00% | P 1.80%

USD       GDP Price Index Q2 (A) A 0.70% | C 1.00% | P 1.20%

USD       Chicago PMI Jul A 52.3 | C 54 | P 51.6

USD       Crude Oil Inventories A 0.4M | R -2.1M | P -2.8M

USD       FOMC Rate Decision A 0.25% | C 0.25% | P 0.25%

 

For today

USDJPY
Topside: 98.40-98.60 medium offers  98.60-98.90 large offers
Downside: 97.30-97.60 decent bids 97.00-97.30 decent sell stops 96.70-97.00 medium bids

EURUSD
Topside: 1.3330-1.3360 medium offers  1.3370-1.3400 light buy stops
Downside: 1.3240-1.3280 light bids spread 1.3220-1.3240 light bids

EURJPY
Topside: 130.30-130.60 light buy stops  130.60-130.90 light buy stops
Downside: nothing of note

AUDUSD
Topside: 0.8990-0.9020 light buy stops  0.9030-0.9050 light mix  0.9060-0.9100 offers
Downside: 0.8940-0.8960 light bids 0.8900-0.8925 medium bids 0.8850-0.8880 medium bids

 

CNY:

China July Official Manufacturing PMI 50.3 Vs. 49.8 Forecast

China HSBC PMI dips to 11-month low in July as demand sags

Growth in China’s Housing Prices Pick Up Pace in July

China’s Big Four Banks’ New Lending Slows Sharply in July – Report

China bank loans to local governments up 6% at end June

China pledges more infrastructures spending to safeguard growth

JPY:

Japanese Bought Net 233.2 Billion Yen Overseas Debt Last Week

EUR/JPY:

Japan Bought 400 Million Euros of ESM Bonds in July: Official

AUD: Australia considers new protected bank deposit levy-media report

Australia home prices rise 1.6% in July – RPData

Australia to increase tobacco tax by 60% over four years

 

  • EUR: The market opened to above the 1.3300 level and moved slightly higher into the first hour before dropping lower as we moved closer to Tokyo, where we started to see offers in EURJPY in a rising USDJPY move forcing the Euro to below 1.3290 on the first move, we bounced back into the Tokyo session with a move through on EURJPY pushing to the 130.20 level touching the 1.3310 before a repeat performance with Euro’s been squeezed by profit taking in EURAUD and EURJPY and again the Euro was forced lower triggering minor stops in the Euro itself dropping it to below 1.3270 area and for the moment it cannot recover and is holding in the area as we move to London. The EU has now found a new focus for its attention that being the Faroe Islands who seem to have “plundered” herring stocks with their massive fleet which has been in receivership if I remember correctly.
  • GBP: Cable struggled throughout the session moving steadily lower and pretty much leading the way as USD became king in a limited range again. Moving from the 1.5207 opening to move to 1.5180 into Tokyo holding the level until some minor gyrations around the Tokyo fix, we moved a touch higher after the limited impact of the fix and started a slow drift to below 1.5155 level where we currently hold going into the London session.
  • JPY: All change again, the market opened around the 97.90 level dipped to 97.75 level holding the level into the Tokyo session fixing supply sent the market below the 97.70 before we started to see buying move in and a rise back through the 98.00 level, triggering some stops through the level taking the market to above the 98.30 level we hold close to the highs for the time being into London.
  • AUD: With only the Kiwi’s and Ozzies in the market we saw the move everyone expected just after the opening with a drop to the 0.8927 level before holding for the moment the market has some reasonable bids showing. Once we moved into Tokyo the market started to move higher with the carry trade being actively traded by the retail market. Oz moved on the back of a decent PMI number to touch above the 0.8990 level before dipping back to the 0.8960/70 level as we move towards the London session.

 

Today’s data

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

CNY        Manufacturing PMI Jul A 50.3 | C 49.8 | P 50.1

AUD       Import Price Index Q/Q Q2 A -0.30% | C 2.00% | P 0.00%

CNY        HSBC/Market Manufacturing PMI Jul A 47.7 | C 47.7 | P 48.2

08:00     EUR        Eurozone PMI Manufacturing Jul (F) C 50.1 | P 50.1

08:30     GBP       PMI Manufacturing Jul C 52.8 | P 52.5

11:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

11:00     GBP       BoE Asset Purchase Target (AUG) C 375B | P 375B

11:30     USD       Challenger Job Cuts Y/Y Jul P 4.80%

11:45     EUR        ECB Rate Decision C 0.50% | P 0.50%

12:30     EUR        ECB Press Conference

12:30     USD       Initial Jobless Claims (JUL 27) C 344K | P 343K

14:00     USD       Construction Spending M/M Jun C 0.40% | P 0.50%

14:00     USD       ISM Manufacturing Jul C 52 | P 50.9

14:00     USD       ISM Prices Paid Jul C 54 | P 52.5

 

Interbank Ranges as of 6am London time

Highs    Lows

EUR/USD             1.3311 | 1.3271

EUR/JPY               130.57 | 129.95

AUD/USD            0.8994 | 0.8931

NZD/USD             0.7983 | 0.7925

USD/CAD             1.0298 | 1.0265

EUR/CHF              1.2321 | 1.2315

USD/CHF             0.9282 | 0.9253

GBP/USD             1.5200 | 1.5155

EUR/GBP             0.8770 | 0.8750

 

Good luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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