Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 98.292 | EURUSD 1.32582 | EURJPY 130.327 | AUDUSD 0.89289 | NZDUSD 0.78099 | USDCAD 1.03614 | EURCHF 1.22956 | USDCHF 0.92737 | GBPUSD 1.53553 | EURGBP 0.86341 |

 

Harry Hindsight

  • EUR: The summer is truly here as volumes seemed largely down on previous days. Opened largely unchanged from Fridays close and started to slip from the 1.3280 level as we moved into the Tokyo session after a dull few hours with the Ozzies away for the day. As the move in Asia developed into a USD buying day in the early part with the Euro dropped to below the 1.3265 in light volumes before a slow recovery into the later part of the session moving around the 1.3275 level into the London session. During the grey hours the market dropped with pre-number selling touching the market taking the market back towards the lows only to rebound on the London opening and run to above the 1.3300 level pre the number, a good PMI number out of the Eurozone was still below the 50 level and the market turned quickly to trade in a channel from there deep into the NYK session trading down to below the 1.3235 level. The main catalyst for the drop off seemed to be better than expected GBP PMI service data. As we moved solidly into the NYK session the market started to recover with the market largely ignoring the ISM numbers as profit taking kicked in from institutional and macro funds, leaving the Euro moving around the 1.3260 area into the close.
  • GBP: Cable opened quietly in an absent Sydney market drifting steadily lower from just below the 1.5300 level, dropping in a spike lower to the 1.5260 level before moving back and drifting into London just above the level. The grey hours saw early buyers picking up the market and at the point of the opening the market was only just short of the 1.5300. The release of the PMI services level saw the market moving up quickly to trade above 1.5360 and eventually touched only just short of the 1.5380 before it ran out of steam, the majority of the action was liquidation of EURGBP longs and specs selling into the market after the numbers. The cross sold off from the Asian highs around the 0.8695 level to drop below 0.8650 before continuing slowly to make a low just above 0.8630 and holding around the level to the close. Cable dropped from the highs in later trading as profit taking from specs kicked in taking the market to 1.5320 before rising to just below 1.5360 into the close.
  • JPY: The USDJPY moved quietly pre-Tokyo having opened around the 99.00 we dipped to 98.90 before recovering into the Tokyo session and rising to above 99.10 from fixing demand and a little follow through. From that point USD spent the rest of the session on the back foot trading lower holding briefly around the 98.80 level before continuing its move lower to the 98.30 in early London, the market held the levels with some light bids and spec buying in an otherwise quiet market, GBPJPY seemed to be well bid and some light stops helped support the USDJPY. The market slowly rose to above the 98.70 level into early NYK before the USD selling took over the market again dropping to below the 98.30 level and holding into the close.
  • AUD: The market opened around the 89.15 area and moved slowly into along a non-existent Sydney market, the move into Tokyo saw renewed selling in the Oz against most of the major currencies with inflationary numbers failing to impress and retail sales causing more problems in the market leaving the market trading to a new low of 0.8850. Having hit the lows there seemed to be a few buyers appearing in the market and slowly grinding higher to reach the opening levels into early London. The market as with the other currencies then spent the day moving on light volumes grinding higher a little to reach the 0.8930 into the close with bets being laid on the market that the RBA announcement would be a cut of 25bps to 2.50% which we all expected.

Yesterday’s premiership results

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

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%

EUR        Eurozone PMI Services Jul (F) A 49.8 | C 49.6 | P 49.6

GBP       PMI Services Jul A 60.2 | C 57.3 | P 56.9

EUR        Eurozone Sentix Investor Confidence Aug A -4.9 | C -10 | P -12.6

EUR        Eurozone Retail Sales M/M Jun A -0.50% | C -0.60% | P 1.00%

USD       ISM Non-Manufacturing Composite Jul 56 | C 53 | P 52.2

For today

USDJPY:
Topside: 98.60-98.80 light offers 99.00-99.30 medium offers 99.50-99.70 light stop bids
Downside: 97.50-97.80 light bids 97.20-97.50 light sell stops

EURUSD:
Topside: 1.3280-1.3300 medium buy stops 1.3300-1.3340 light buy stops 1.3340-1.3370 light mix 1.3380-1.3400 large offers
Downside: 1.3200-1.3240 medium bids 1.3170-1.3200 light mix

AUDUSD:
Topside: 0.8950-0.8975 light buy stops 0.8970-0.9000 light offers 0.9000-0.9060 light offers
Downside: 0.8870-0.8900 light sell stops 0.8800-0.8840 light bids

 

EUR:

France should ease austerity, cut spending IMF

Threat of Italy government crisis recedes, for now with the summer break

GBP:

British retailers enjoy best July since 2006

AUD:

RBA cuts and possible A$ could fall further

RBA sees reasonable prospects to global growth pick up next year

Australian job advertisements fall 1.1% in July ANZ

PM Rudd wants to ensure rates are as low as possible.

NZD:

NZ economy not likely to be badly hurt by dairy scare Fonterra FinMin

JPY:

Japan’s $80B public fund may shift funds to stocks from bonds

 

  • EUR: Early Asia was quiet moving into the Tokyo session however, once we’d moved into the session we started to see early buyers. Moving from the 1.3260 open the market moved off its lows below 1.3254 to above 1.3270 as fixing supply for USDJPY moved USD’s lower. Once the fix was over we dropped back into a holding pattern around the mid 1.3260’s into the London session.
  • GBP: Cable held a fairly tight range for the most part, moving from the opening levels of 1.5356 dipping to 1.5344 on light profit taking before rallying into the Tokyo session through the fix to just short of 1.5370 before dropping back after the RBA announcement to breech the lows. We move to the London market holding the 1.5345 area. EURGBP lost a little ground rising to above the 0.8640 level.
  • JPY: USDJPY  moved quietly in pre-Tokyo holding just below the 98.30 level in a tight range before the market dropped quickly on fixing supply to touch the 97.90 and then holding a 97.90-98.10 in some heavy trading, the market gradually ground slowly lower pushing through the 97.90 before the RBA announcement was released and the USDJPY rose quickly as renewed interest in the carry trade AUDJPY kicked in taking the market to above the opening levels quickly before dipping and holding around the 98.20 level as we head towards London.
  • AUD: The market opened around the 0.8930 level and having moved just after the opening to above the 0.8940 dropped off into the Tokyo opening as retail Japan was quick to square off positions picked up yesterday, the market dropped back to the 0.8910 before holding around the opening into the RBA announcement. For once it was a win, win situation as the market expected the cut and perceived it to be in line with what was needed to help the economy along, failing that a no move would have also had the market rising as AUDJPY carry trade would have been a little more attractive, either way the market rallied strongly if not as spectacularly as previous rate movements to above the 0.8980 level before holding around the 0.8970’s into the London opening on reasonable volumes. Statement was less dovish than previous ones.

Today’s data

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

GBP       BRC Sales Like-For-Like Y/Y Jul A 2.20% | P 1.40%

AUD       Trade Balance (AUD) Jun A 602M | C 800M | P 670M

AUD       House Price Index Q/Q Q2 A 2.40% | C 1.00% | P 0.10%

AUD       RBA Rate Decision A 2.50% | C 2.50% | P 2.75%

JPY         Leading Index Jun (P) A 107 | C 107.3 | P 110.7

08:30     GBP       Industrial Production M/M Jun C 0.50% | P 0.00%

08:30     GBP       Industrial Production Y/Y Jun C 0.60% | P -2.30%

08:30     GBP       Manufacturing Production M/M Jun C 0.70% | P -0.80%

08:30     GBP       Manufacturing Production Y/Y Jun C 0.70% | P -2.90%

09:00     EUR        Italian GDP Q/Q Q2 (P) C -0.40% | P -0.60%

10:00     EUR        German Factory Orders M/M Jun C 1.00% | P -1.30%

12:30     CAD       Trade Balance (CAD) Jun C -0.52B | P -0.30B

12:30     USD       Trade Balance Jun C -$43.5B | P -$45.0B

14:00     GBP       NIESR GDP Estimate Jul P 0.60%

 

Interbank Ranges as of 6am London time

Highs    Lows

EURUSD               1.32715 | 1.32535

JPYUSD                 98.38 | 97.84
GBPUSD               1.5369 | 1.5343
USDCHF               0.92805 | 0.92465
AUDUSD              0.8987 | 0.8907
NZDUSD               0.7863 | 0.7828
USDCAD               1.0362 | 1.0348
EURCHF                1.2305 | 1.2266
EURGBP               0.8642 | 0.8633
EURJPY                 130.415 | 129.81

Good luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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