Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 97.744 | EURUSD 1.33064 | EURJPY 130.051 | AUDUSD 0.89865 | NZDUSD 0.7912 | USDCAD 1.03732 | EURCHF 1.23191 | USDCHF 0.92579 | GBPUSD 1.53478 | EURGBP 0.86688 |

 

Harry Hindsight

  • EUR: Opening around the 1.3260 areas the market traded quietly for the most during Asia dipping in early cross selling to below the 1.3255 level only to recover to above the 1.3270 before holding around the 1.3265 for a great period of time. RBA announcement did little in the way for the Euro causing a minor dip. Grey hours saw the early Europeans as liquidators of long positions infront of a couple of Euro numbers and we made the lows during the two hours to London’s official opening trading below the 1.3250 area. London opening had the market returning to its Asian median before the numbers started to hit with a good set out of the UK helping the Euro higher however, it wasn’t until the German factory orders was released that the market moved quickly higher to above the 1.3295 level with a number nearly 4 times the expected level and a slight revision for last month. While the market lost impetus at the highs the market saw day traders taking shorts in front of the 1.3300 level that had become congested over the past week or so and we dipped below the 1.3270 level. NYK came in and immediately started to sell USD’s and the rally in Euro’s began again this time with weak shorts been taken out and providing the impetus to move through the 1.3300, this didn’t scare off the shorts and although we’d touched above 1.3300 we saw fresh leveraged selling into the rally, another push saw the same effect, a quick trigger of weak stops and a surge this time to above 1.3310 and a final push to above 1.3320 before the market felt it had done enough and we dropped quickly to the 1.3280. With the topside cleared somewhat the market moved back above the 1.3300 level and settled into a 1.3300-1.3310 range into the close for the day.
  • GBP: Cable opened around the 1.5355 dipping into Tokyo to below the 1.5345 level before rallying strongly to the 1.5370 area triggered initially by fixing demand, once the market had topped it was a steady drift into the London session with only a minor dip on the RBA cut. As we moved into the grey hours the market dropped off to below the 1.5335 level holding around the level into London where the market reversed, a good set of numbers had the GBP rallying to above the 1.5390 level dragging the Euro with it, only to lose ground on the Euro as the German Factory orders trumped the UK numbers, once the GBP hit its levels it started to drop as EURGBP started to recover and started to move higher triggering some minor stops to break to the 0.8665 from the 0.8620 levels. Cable dripped back to the Asian lows before holding around the 1.5350 area. Into NYK we saw the market again moving to the highs triggering minor stops and the market began to become choppy as liquidity disappeared. The market eventually decided on holding the downside struggling around the 1.5350 area into the close.
  • JPY: The USDJPY moved quietly in pre-Tokyo trading holding just below the 98.30 and then fixing supply upset the apple cart forcing the USDJPY to below to the 97.90 level were we held and traded quietly between there and 98.00 until the RBA cut, at which point the market saw fresh buying of AUDJPY carry trade on the back of the market perceiving the move as more astute types bought taking USDJPY back to just short of 98.60 as we moved into London as USDJPY started to take on a bid tone late in the session. The market opened in London on its highs and the market began to drop falling back to the 98.10 level and holding around the level into the NYK session before USD selling took over from Yen strength and the market hit below 97.60 before holding for the remainder of the day into the close.
  • AUD: An opening around the 0.8930 level had the market topping just above 0.8940 before dipping to the lows below 0.8910 on early sellers in front of the announcement, the market traded quietly back to the opening level. The RBA cut by 0.25% as expected triggering some good buying as the market perceived the cut to be in line with economic needs. Comments were less dovish indicating it could be the end of the moves however that remains to be seen, the market topped above the 0.8980 before stalling with talk of the 0.8990 break down point being a key pivotal point. Into London the market pushed again to the topside and although we triggered weak stops and stop entries and pushed through 0.9000 it failed the level dropping quickly to the 0.8955 area before finding some bids in the area to hold the market. NYK opened with similar ideas to London and again broached the 0.9000 before settling into a tight range around the 0.8990.

Yesterday’s premiership results

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

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 | R 507M

AUD       House Price Index Q/Q Q2 A 2.40% | C 1.00% | P 0.10% | R 0.80%

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

GBP       Industrial Production M/M Jun A 0.30% | C 0.50% | P 0.00%

GBP       Industrial Production Y/Y Jun 1.20% | C 0.60% | P -2.30%

GBP       Manufacturing Production M/M Jun A 1.90% | C 0.70% | P -0.80% | R -0.70%

GBP       Manufacturing Production Y/Y Jun A 2.00% | C 0.70% | P -2.90%

EUR        Italian GDP Q/Q Q2 (P) A -0.20% | C -0.40% | P -0.60%

EUR        German Factory Orders M/M Jun A 3.88% | C 1.00% | P -1.30% | R -0.50%

CAD       Trade Balance (CAD) Jun A -0.5B | C -0.52B | P -0.30B

USD       Trade Balance Jun -$34.2B | C -$43.5B | P -$45.0B

GBP       NIESR GDP Estimate Jul A 0.70% | P 0.60%

For today

USDJPY:
Topside: 97.90-98.20 light buy stops 98.20-98.60 medium offers 98.60-99.00 light offers
Downside: 97.00-97.20 medium sell stops 96.80-97.00 light bids

EURUSD:
Topside: 1.3320-1.3350 light mix 1.3350-1.3385 light offers 1.3390-1.3420 light mix 1.3420-1.3450 light offers
Downside: 1.3260-1.3290 light mix 1.3240-1.3260 light sell stops 1.3220-1.3240 light bids

AUDUSD:
Topside: 0.8980-0.8990 light stops 0.9000-0.9030 light offers 0.9030-0.9060 light offers 0.9060-0.9080 light buy stops
Downside: 0.8900-0.8925 light bids

 

NZD:

Fonterra under fire over milk scare; more product recalls

NZ jobless rate nudges higher, wage pressure modest in Q2

EUR:

Deutsche Bank warns proposed tax could hurt Europe’s FX market

France’s trade deficit shrank in first half of 2013 according to trade minister Nicole Bricq how spoke to Les Echos daily ahead of official publication. (in some quarters that would be like violating a restricted list).

Italy’s upcoming election has set doom and gloom merchants worrying about austerity measure’s becoming political footballs and jeopardising the economies recovery.

USD:

Fed may cut bond buys as soon as next month say’s Fed’s Evans

GBP:

Carney joins the forward guidance club (how can you guide something in the past)

AUD:

Opposition party promises company tax cut as election rhetoric begins.

 

  • EUR: The market opened up just above the 1.3300 level and touched briefly above 1.3310 before holding steady into the Tokyo session, With initial selling in USDJPY kicking in the Euro moved higher as total market started to sell USD’s generally and Euro’s pushed quietly to the 1.3315 level however, the rally was short lived before JPY strengthening picked up and EURJPY selling started to kick in pressurising the Euro lower pushing to the 1.3294 before holding, as we move towards London the Euro has managed to move to just above the figure area.
  • GBP: After the market close in NYK we saw some light buying in Cable from profit takers and the market again lifted into the Tokyo opening with the same effect on Cable as the market saw in the Euro stopping just short of the 1.5365 level before a precipitice drop to the 1.5320 before holding the 1.5320-30 level as the market gets closer to London.
  • JPY: Early pre-Tokyo was quiet opening around the 97.75 area and moving to above 97.80 to make the highs for the day, as soon as the market opened in in Tokyo the sellers appeared and we saw a quick move to the 97.10 level in the first 10mins of trading with retail longs being squeezed out of the market as long term players sold the market. The market bounced from the lows to above 97.50 however, the tone was set and the market dropped for a second time and bounced 3 times between the levels before holding around the 97.30 level.
  • AUD: Pre-Tokyo traded quietly around the 0.8985 area before rallying to above the 0.9000 level in early Tokyo before the Yen strengthening started to affect the market triggering margin call trades and turning out some of the AUDJPY buyers from the day before as the selling kicked in the market weakened in the Oz moving down to below the 0.8955 which in the limited ranges seems to be a sticking point at the moment, the Oz currently holds above the 0.8960 level.

 

Today’s data

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

NZD       Unemployment Rate Q2 A 6.40% | C 6.30% | P 6.20%

NZD       Employment Change Q/Q Q2 A 0.40% | C 0.30% | P 1.70%

AUD       Home Loans Jun A 2.70% | C 2.00% | P 1.80%

05:45     CHF        SECO Consumer Confidence Jul C -2 | P -5

07:00     CHF        Foreign Currency Reserves Jul C 430.0B | P 434.9B

07:15     CHF        CPI M/M Jul C -0.40% | P 0.10%

07:15     CHF        CPI Y/Y Jul C -0.10% | P -0.10%

09:30     GBP       BoE Inflation Report

10:00     EUR        German Industrial Production M/M Jun C 0.20% | P -1.00%

12:30     CAD       Building Permits M/M Jun C 6.20% | P 4.50%

14:00     CAD       Ivey PMI Jul C 56 | P 55.3

14:30     USD       Crude Oil Inventories P 0.4M

 

Interbank Ranges as of 6am London time

Highs    Lows

EURUSD               1.3316 | 1.3293

JPYUSD                 97.80 | 97.09
GBPUSD               1.5363 | 1.5319
USDCHF               0.9265 | 0.9242
AUDUSD              0.9000 | 0.8952
NZDUSD               0.7916 | 0.7885
USDCAD               1.0389 | 1.0369
EURCHF                1.2322 | 1.2307
EURGBP               0.8679 | 0.8663
EURJPY                 130.11 | 129.15

Good luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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