Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 98.939 98.71-99.08 | EURUSD 1.32804 1.3270-91 | EURJPY 131.403 131.15-74 | AUDUSD 0.89037 0.8898-0.8908 | NZDUSD 0.78368 0.7720-25 | USDCAD 1.03897 1.0379-97 | EURCHF 1.23421 1.2339-51 | USDCHF 0.92941 0.9279-0.93125 | GBPUSD 1.5288 1.5275-1.5300 | EURGBP 0.86871 0.8676-0.87025 |

 

Weekend News

CNY:

China Services Growth Picks Up in Sign Economy Stabilizing
PBOC Says to Keep Prudent Monetary Policy, Money Market Stable
China to Expand Individual Property Tax Trial, Xinhua Says
China Issues Plan to Overhaul Troubled Shipbuilding Industry
China May Let More Families Have Second Child, Xinhua Says
NZD/CNY:

N.Z. Says China Suspends Imports of All Fonterra Milk Powder

Russia also bans all Fonterra products
USD:

Al-Qaeda Threat Cited by U.S. in Issuing Global Travel Alert
Geithner Said to Advise Obama on Choice of Next Fed Chairman
Fed’s Bullard Urges Wait for 2nd-Half Data Before Tapering
JPY:

BOJ Slows Purchases of JGBs as Long-Term Yields Stable: Nikkei
Japan April-June Pre-tax Profits Jump at Listed Firms: Nikkei
Radioactive Groundwater May Reach Surface at Fukushima: Asahi
Japan Reform Minister to Visit Yasukuni Shrine Aug. 15: Asahi
EUR:

Greece Won’t Get Loan Tranches without Public-Sector Cuts: Real
Germany’s Social Democrats, Greens Gain in Poll: Tagesspiegel
Berlusconi’s Party Pushes for Pardon as Mass Resignation Readied
Letta May Resign If Government Loses Support, Repubblica Says
CHF:

SNB Officials Weigh Increase of Mortgage Capital Buffer: SamS

 

Harry Hindsight

  • EUR: A slow day in early trading opening around the 1.3210 area and trading sideways around that level until into the Tokyo session USD started to move higher across the board, with Euro dropping to the 1.3190 level meeting the early bids. The market moved away from the level and moved back to the 1.3210 level topping just above 1.3220 and using that level into London and holding the 13210-25 level for the most part until the NYK market opened. With a less than expected NFP number USD dropped quickly and Euro initially dipped to below the 1.3190 area before moving quickly to above 1.3280. The market gyrated after the numbers with factory orders numbers doing more damage to the USD to push the high above the 1.3290 level to make the high. The market ignored the better employment numbers and the market settled down to trade around the 1.3280 level for the rest of the session into the close.
  • GBP: Cable was very little different from the Euro holding around 1.5120 level, dipping to the 1.5112 level before moving ahead to around the 1.5135 level in late Asia. We moved into London with some strong buying appearing in the market pushing to close to 1.5180 before drifting back to the 1.5160 level. EURGBP seemed to be the mover for GBP with the market dropping into the London session from 0.8745 to below 0.8715 helped by the PMI construction numbers which showed a good improvement above consensus. On the NFP number the Cable rallied quickly to just short of 1.5280 and then dipped into the factory orders numbers to take it then higher to above the 1.5300 briefly before trading quietly for several hours towards the close. On the close the market again moved to above 1.5300 however, the market eventually settled back to the mid 1.5285’s
  • JPY: A fairly quiet opening around the 99.60 level before slowly dropping off into the Tokyo session to the 99.35 area, with supply in the USDJPY and crosses. Post fix the market rebounded to the 99.70 level coincided with equity moves higher and by mid-session the move was over and we started to see the moves reversing to trade down through the open and down through the 99.30 level to hold on the supporting bids. The market rejected the level with volumes light the market rallied for the rest of the session, moving to the 99.50 level into London. Europeans continued to buy the USDJPY all the way into the US numbers touching above the 99.90 level briefly before the US numbers hit the market and USD moved quickly lower. USDJPY dropped initially to the 98.90 areas, bouncing into the next number before extending the lows to below the 98.70 level, from this point there were a number of buyers appearing from leveraged types and equity hedging and the market slowly moved to above the 99.10 level before drifting quietly into the close just below the 99.00 level.
  • AUD: The Oz while having a reasonable range was one of the only currencies to fail to make an impression against the USD. We opened around the 0.8930 level moving slowly in early trading to above the 0.8940 level before seeing weak stops in AUDJPY triggered during the fix triggering further stops in straight AUDUSD moving the pair to a new low for the year just below 0.8890, the market recovered a little then through the session however, it never seemed to recover further than 0.8920 and once we moved into London the sellers again appeared in the market with leveraged types selling steadily into the session to touch below 0.8880. Pre US figure saw the leveraged types cutting their shorts and the market hung around the 0.8900 into NFP. A quick spike higher touched 0.8970 before the market collapsed quickly to make a new low of 0.8870. The bounce was not that convincing however; the market did make the opening levels before steadily losing ground over the session to settle only just above the 0.8900.

Friday’s premiership results

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

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%

CHF        SVME-PMI Index Jul A 57.4 | C 52.5 | P 51.9

GBP       PMI Construction Jul A 57 | C 51.5 | P 51

EUR        Eurozone PPI M/M Jun A 0.00% | C 0.00% | P -0.30% | R -0.20%

EUR        Eurozone PPI Y/Y Jun A 0.30% | C 0.30% | P -0.10% | R -0.20%

USD       Change in Non-farm Payrolls Jul A 162K | C 185K | P 195K | R 188K

USD       Unemployment Rate Jul A 7.40% | C 7.50% | P 7.60%

USD       Personal Income Jun A 0.30% | C 0.40% | P 0.50% | R 0.40%

USD       Personal Spending Jun A 0.50% | C 0.50% | P 0.30% | R 0.20%

USD       PCE Deflator Y/Y Jun A 1.30% | C 1.30% | P 1.00% | R 1.10%

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

USD       PCE Core Y/Y Jun A 1.20% | C 1.10% | P 1.10% | R 1.20%

USD       Factory Orders Jun A 1.50% | C 2.30% | P 2.10% | R 3.00%

 

For today

USDJPY:
Topside: 99.10-99.50 light buy stops 99.70-100.00 light mix 100.50-100.80 medium buy stops
Downside: 98.50-98.80 light bids 98.10-98.50 light mix

EURUSD:
Topside: 1.3290-1.3320 light buy stops 1.3320-1.3350 light offers 1.3350-1.3380 light offers
Downside: 1.3210-1.3250 light bids 1.3180-1.3210 light bids

AUDUSD:
Topside: 0.8970-0.8980 light buy stops 0.8990-0.9030 light offers
Downside: 0.8870-0.8900 light bids 0.8835-50 light mix

 

EUR:

Germany’s left urges new alliance to oust Merkel after poll boost

USD:

Record inflow into US equity funds in July TrimTabs

US closed 21 embassies and consulates after warnings of potential attacks

AUD:

PM Rudd calls the Australian Federal election for Sept 7th.

Abbot says he won’t do any deals to form minority Government

CNY:

PBOC (have hired Gordon Brown or taken page two from his book) says to continue prudent monetary policy.

PBOC will not cut RRR in short term Financial news community

GOLD:

Miners seen hedging against further loses in the market.

NZD:

New Zealand Government put pressure on Fonterra to remedy problems and ascertain depth of contamination.

 

  • EUR: With New South Wales out for the day the market was extremely quiet from the opening around the 1.3280 area and drifting down into the mid 1.3260’s before moving back to the 1.3280 levels and holding below the level as we move towards London in one of the slowest days this year.
  • GBP: If the Euro was quiet then Cable was even quieter, with only a minor spike lower to break the general drift lower. Moving from just below the 1.5300 level to hold in the 1.5270’s were we currently hold.
  • JPY: USDJPY opened around the 98.95 area rising in early trading to above the 99.05 level before drifting lower as we moved to Tokyo. Once we moved into Tokyo the market drifted lower to touch the 98.80 level before rising on fixing demand to make the highs at 99.15 on and extended run, with the demand out of the way the market immediately moved lower with a very thin market dropping over a couple of hours to extend the low to 98.71 area before holding around the 98.75 level as we move to London.
  • AUD: A bad day in the office or not depending where you sit in Australia, the market opened around the 0.8905 area and started to rise pushing above 0.8920 in front of the Oz data however, once the figures were released the market turned quickly lower, with inflation numbers setting the tone only to be added to by poor retail sales the market moved from the opening area to 0.8880 and then another leg lower to make a new yearly low below 0.8850, the market has seen some late buying to take the market back to the 0.8880 level and we hold in that area. AUDJPY cross selling kicked in from the numbers to help it lower.

Today’s data

Actual = A Consensus = C  Previous = P Timings GMT

AUD       TD Securities Inflation M/M Jul A 0.50% | P 0.00%

AUD       Retail Sales M/M Jun A 0.00% | C 0.40% | P 0.10%

08:00     EUR        Eurozone PMI Services Jul (F) C 49.6 | P 49.6

08:30     GBP       PMI Services Jul C 57.3 | P 56.9

08:30     EUR        Eurozone Sentix Investor Confidence Aug C -10 | P -12.6

09:00     EUR        Eurozone Retail Sales M/M Jun C -0.60% | P 1.00%

14:00     USD       ISM Non-Manufacturing Composite Jul C 53 | P 52.2

 

Ranges as of 6am London time including Sydney open

Highs    Lows

EURUSD               1.3291 | 1.3264

USDJPY                 99.15 | 98.71

GBPUSD               1.5297 | 1.5259

CHFUSD               0.9303 | 0.9281

CADUSD               1.0403 | 1.0385

AUDUSD              0.8933 | 0.8848

NZDUSD               0.7785 | 0.7693

EURCHF                1.2347 | 1.2334

EURGBP               0.86955 | 0.8684

EURJPY                 131.55 | 131.10

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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