Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 99.548 | EURUSD 1.32079 | EURJPY 131.489 | AUDUSD 0.89263 | NZDUSD 0.78784 | USDCAD 1.03458 | EURCHF 1.23724 | USDCHF 0.93687 | GBPUSD 1.51196 | EURGBP 0.87348 |

 

Harry Hindsight

  • EUR: The Euro made its highs early in the Tokyo session having opened around the 1.3303 area it moved quietly into Tokyo rising to 1.3311 before seeing EURAUD and AUDJPY selling enter the market in the early parts of the session, the Euro was pushed lower in reasonably quiet trading moving to the 1.3275 area where we spent a good portion of the session dipping to below 1.3270 into the grey hours. London opened with strong selling and the market moved to the 1.3240 levels before the numbers started to appear for the day. A good PMI number did very little to the market and all eyes remained focused on the rate decision trading in the 1.3250-30 area into the number, while the market expected little change the market still saw a flurry of activity as the black boxes kicked in and took the market to the lows below 1.3200 before bouncing back higher on dovish comments by Draghi, who seemed to have taken a leaf out of Greenspan’s book of double talk telling the market of improvements and then saying no change is likely over the coming months however, the market liked it or not as the case may be there was a small short squeeze taking out the recent sellers and putting the market short of the 1.3270 break down point. From there it was a slow session with the Euro continuing to lose ground and moving back to the 1.3200 area and holding only just above the level into the close.
  • GBP: Cable traded steadily lower throughout the Asian session moving from the opening levels around 1.5210 dropping to 1.5180 in pre-Tokyo before hedging lower over the remainder of the session to the 1.5160 level where the market held until the London opening, By the open the market had hit below 1.5140 and was suddenly caught short with the release of good PMI numbers, triggering a quick run higher to the 1.5220 triggering weak stops along the way. The BoE announcements remained as expected and the market drifted a little into the NYK opening before a further spike higher from the 1.5160 level to above 1.5240 as real money entered the market, with both Cable reacting and EURGBP. EURGBP had moved from close to the 0.8770 level in Asia to drop quiet precipitately to below 0.8700 touching 0.8680 at one stage as the market reversed this week’s gains. The rally in the Cable however, was short lived as US data topped expectations for the most part and impacted through the GBP more so than the Euro returning the EURGBP to the 0.8740 area and dragging the Cable to below the 1.5120 level before holding between: 1.5110-20 for the remainder of the session.
  • JPY: Having opened quietly around the 97.80 area the market moved into the Tokyo session little changed and only once the CNY numbers were released did we start to see a weakening in Yen, which then continued throughout the day, the market has seen heavy buyers over the course of the week in USDJPY however, this has been countered for the most part by retail selling of cross currencies as the market ran scared of the drops we’d seen in the Oz, today was no real different apart from there was a lack of cross selling once we’d moved deeper into Tokyo and the USDJPY started to rise steadily moving to the 98.80 level as we moved into London, before pausing until the NYK market opened to resume its move with the data related USD rally. We end the day around the 99.50 level having failed to break above 99.60 for the moment the market holds most of the gains.
  • AUD: Oz opened around the 0.8985 area before dropping quickly to 0.8927 in a quick illiquid movement before bouncing and falling back to a similar low into the Tokyo opening, from that point the market traded quietly and steadily higher pushing back to above the opening level on the CNY PMI number. The market drifted from that point holding generally in the 0.8960-70 level into the London market. During the next session the Oz would push a little higher to touch the 0.8990 as we moved to NYK before the market dropped quickly just after the opening in NYK as the US data releases started to effect the market. The market dropped to below 0.8920 and bounced initially but again returned to the low end breaking to just below 0.8910, we held then in a 0.8920-40 levels into the close finishing around the 0.8930. With fresh selling seen entering the market there was plenty of option for shorts to start to buy back.

Yesterday’s premiership results

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

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

EUR        Eurozone PMI Manufacturing Jul (F) A 50.3 | C 50.1 | P 50.1

GBP       PMI Manufacturing Jul A 54.6 | C 52.8 | P 52.5

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target (AUG) A 375B | C 375B | P 375B

USD       Challenger Job Cuts Y/Y Jul A 2.30% | P 4.80%

EUR        ECB Rate Decision A 0.50% | C 0.50% | P 0.50%

USD       Initial Jobless Claims (JUL 27) A 326K | C 344K | P 343K

USD       Construction Spending M/M Jun A -0.60% | C 0.40% | P 0.50%

USD       ISM Manufacturing Jul A 55.4 | C 52 | P 50.9

USD       ISM Prices Paid Jul A 49 | C 54 | P 52.5

For today

USDJPY:
Topside: 99.70-100.00 medium offers 100.00-100.30 large offers 100.40-100.60 light bid stops
Downside: 99.00-99.30 light bids 98.70-99.00 light bids 0.98.40-0.98.20 light stops

EURUSD:
Topside: 1.3250-1.3275 light offers 1.3290-1.3320 light buy stops 1.3320-1.3350 light buy stops
Downside: 1.3170-1.3190 light mix 1.3140-1.3170 light bids

AUDUSD:
Topside: 0.8940-0.8960 light offers 0.8960-0.9000 light buy stops 0.9000-0.9020 light offers
Downside: 0.8860-0.8890 light bids 0.8840-0.8855 light bids

 

JPY:

Japan PM Abe’s Government Split Over Sales Tax Hike

Aso: Don’t Expect Sales Tax Hike to Cause Slowdown Like in 1997

Japan Fin Min Aso: No Plan to Step Down as Finance Min

IMF’s Lagarde says confident Japan will stick by reform pledges

AUD:

Australia cuts growth, revenue forecasts ahead of election

Australia’s Public Finances Compare Favourably to Others: Fitch

Australian 2Q Final PPI +0.1% On Quarter

CNY/AUD:

Chinese tycoon plans $3.8 bln casino resort in Australia

CNY/MYR:

China doubles Malaysia central bank’s investment quota in July

CNY:

Yuan’s Real Exchange Rate Undervalued 5%-10%, IMF Report Says

China to Ease One-Child Policy – Report

 

  • EUR: Euro opened around the 1.3210 area and traded sideways into early Tokyo with some EURJPY supply hit the market forcing the Euro lower down to the 1.3190 level where the market met bids, once the supply finished the market bounced to its previous levels holding the 1.3210 level. Over the second part of the day we moved to the 1.3224 level as some small stop went through dropping back to the holding area of 1.3210.
  • GBP: A very quiet session for the Cable opening around the 1.5120 level and drifting to a low just below 1.5110 and then moving to a high above 1.5135 level before returning to the opening levels with only small cross plays making any movement.
  • JPY: The opening was fairly quiet opening around the 99.60 level before slowly dropping off into the Tokyo session, fixing supply in cross EURJPY, AUDJPY and straight USDJPY took the market lower to the 99.35 level. However, once the market moved past the fix the market rebounded quickly and traded to its highs just short of the 99.70 level, the move higher seemed to coincide with rallies in the equity markets. The rally ended and dropped back to the lows and extended the lows to below the 99.30 before moving back to above the 99.50 area where we currently hold as we move towards the London session.
  • AUD: The market opened around the 0.8930 area and initially traded a little higher pushing above the 0.8940 level before fixing supply and weak stops in AUDJPY kicked in and while the fix finished the Oz was dropping to make a new low of 88.90 touching the bids and holding, With a forthcoming mini budget the market still feels nervous and currently holds only just above the lows as we move towards London.

Today’s data

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

JPY         Monetary Base Y/Y Jul A 38.00% | C 43.20% | P 36.00%

AUD       PPI Q/Q Q2 A 0.10% | C 0.50% | P 0.30%

07:30     CHF        SVME-PMI Index Jul C 52.5 | P 51.9

08:30     GBP       PMI Construction Jul C 51.5 | P 51

09:00     EUR        Eurozone PPI M/M Jun C 0.00% | P -0.30%

09:00     EUR        Eurozone PPI Y/Y Jun C 0.30% | P -0.10%

12:30     USD       Change in Non-farm Payrolls Jul C 185K | P 195K

12:30     USD       Unemployment Rate Jul C 7.50% | P 7.60%

12:30     USD       Personal Income Jun C 0.40% | P 0.50%

12:30     USD       Personal Spending Jun C 0.50% | P 0.30%

12:30     USD       PCE Deflator M/M Jun C 0.40% | P 0.10%

12:30     USD       PCE Deflator Y/Y Jun C 1.30% | P 1.00%

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

12:30     USD       PCE Core Y/Y Jun C 1.10% | P 1.10%

14:00     USD       Factory Orders Jun C 2.30% | P 2.10%

 

Interbank Ranges as of 6am London time

Highs    Lows

EUR/USD             1.32235 | 1.3189

EUR/JPY               131.55 | 131.225

AUD/USD            0.8946 | 0.8889

NZD/USD             0.7907 | 0.7884

USD/CAD             1.0363 | 1.0345

EUR/CHF              1.2382 | 1.2371

USD/CHF             0.93865 | 0.9362

GBP/USD             1.5135 | 1.5104

EUR/GBP             0.8740 | 0.87325

 

Good luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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