Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 96.335 | EURUSD 1.33364 | EURJPY 128.491 | AUDUSD 0.89988 | NZDUSD 0.79615 | USDCAD 1.0424 | EURCHF 1.22929 | USDCHF 0.92178 | GBPUSD 1.54879 | EURGBP 0.86106 |

 

Harry Hindsight

  • EUR: The Euro opened just above the 1.3300 level trading quietly into Tokyo where the market topped around the 1.3315 as USDJPY moved lower. However, it was all JPY related and it wasn’t long before the EURJPY also came under pressure and began a steady move lower to trade below the 1.3300 touching below the 1.3295. The market held in the area late into the session before a steady rise into the grey hours back above the 1.3310 level. Early CHF numbers then set the tone for the London session and Euro’s dropped on a set of poor numbers, while only loosely connected it was sufficient to drag the market to below the 1.3270 level. We started a slight bounce when the German IP numbers hit the news with another big number and small revision and Euros again jumped higher pushing to the 1.3325 before running into some stiff offers, comments from the BoE also helped. From there we dropped back a little before the NYK market moved in and started to run the market higher in a steady climb to above 1.3345 before holding into a mid-1.3330’s close. Even so the volumes were only marginally interesting staying within the summer averages.
  • GBP: Cable traded quietly for the most part, moving from the 1.5350 topping above 1.5360 before drifting off through the Asian session to hold around 1.5320, the move into London saw the market start to drift with the drag of the Euro and on the release of the German numbers EURGBP went bid for a short period with the cross moving from 0.8680 to above the 0.8730. Cable moved lower to trade below 1.5210 on a strong spike lower before the BoE comments started to move into the market reversing the move and more as GBP went rampant, and one has to say I’m not sure on what, ok so they have stated years of low interest until 7% employment is breeched understandable I suppose however, with inflation above targeted levels I still believe that will be the kicker at some stage and the hyperbole is just that. The market took the commentary to heart and ran quickly higher to above the 1.5480 levels before slowing as we moved into NYK. NYK took the market to above 1.5530 before slowly drifting back to below the 1.5500 levels in a quiet NYK session. EURGBP moved off the highs above 0.8730 dropping quickly to break to below 0.8590 bouncing slightly before running slightly lower to touch 0.8680 and drifting higher to above the 0.8610 level.
  • JPY: USDJPY moved off the high opening around the 97.80 area and dipped slowly towards the Tokyo market before dropping quickly from the opening to touch the 97.10 level, we then ranged from the 97.10 level to 97.50 into the grey hours before eventually breaking through the downside bids and moved into London falling to below 96.80 before coming to a stop. Once into the London session buying in EURJPY and GBPJPY helped the USDJPY to move back to above 97.30 however, as we moved into the NYK session the selling pressure again increased and we moved steadily lower over the course of the session as the moves on the day all became USD selling. There was a minor bounce before the market renewed the downward pressure to trade into a close just above the 96.30 area.
  • AUD: The Oz remained fairly quiet on its own however, movements in USDJPY initially triggered selling in the carry trades taking the market down from the 0.9000 area in a steady decline from then on to hold the 0.8960 levels into the London session, again the movements in EUR and GBP with cross buying against the Oz again pushing the AUDUSD lower to 0.8930 this time however, again it was the other currencies doing the work as could be seen by the flat spots after the moves lower. NYK session saw the Oz start to recover as USD selling took over the action leaving the market rising steadily to above the 0.9020 before settling back to hold around the 0.9000 level into the close.

Yesterday’s premiership results

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

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% | R 1.70%

CHF        SECO Consumer Confidence Jul A -9 | C -2 | P -5

CHF        Foreign Currency Reserves Jul A 434.9B | C 430.0B | P 434.9B | R 434.8B

CHF        CPI M/M Jul A -0.40% | C -0.40% | P 0.10%

CHF        CPI Y/Y Jul A 0.00% | C -0.10% | P -0.10%

EUR        German Industrial Production M/M Jun A 2.40% | C 0.20% | P -1.00% | R -0.80%

CAD       Building Permits M/M Jun A -10.30% | C 6.20% | P 4.50%

CAD       Ivey PMI Jul A 48.4 | C 56 | P 55.3

USD       Crude Oil Inventories A -1.3M | P 0.4M

For today

USDJPY:
Topside: 96.80-97.20 light buy stops 97.50-70 light buy stops 97.80-98.00 light offers
Downside: 96.00-96.30 light sell stops 95.70-96.00 light mix 95.40-95.70 medium bids 95.00-95.20 light bids

EURUSD:
Topside: 1.3350-1.3370 medium mix 1.3390-1.3420 light offers 1.3420-1.3450 light mix
Downside: 1.3280-1.3320 light mix 1.3260-1.3240 light sell stops

AUDUSD:
Topside: 0.9080-0.9100 medium offers 0.9100-9120 light offers
Downside: 0.9010-0.9030 light bids 0.8950-0.8975 light bids

 

GBP:

All the papers run Carney’s sleight of hand on holding interest rates until 7% employment.

USD:

Detroit may get through bankruptcy without new borrowing

NZD:

NZ house prices hit record in July

AUD:

Australia jobs drop in July, unemployment steady

CNY:

China’s trade balance slipped with an increase of 10.9% imports against expected 1%

JPY:

BoJ unchanged as expected

BoJ board member Kiuchi proposed making 2% inflation large a medium to long term target

BoJ says inflation expectations appear to be rising on the whole

BoJ says CPI rises likely to gradually accelerate

 

 

  • EUR: Having opened around the 1.3336 area the market moved to only just above the 1.3340 level into the Tokyo session before a steady slip throughout a very quiet session for the Euro to trade the 1.3330/40 into the London market.
  • GBP: A quiet day with a very tight range opening around the 1.5490 level and trading just short of the 1.5500 level and dipping only slightly lower than 1.5486 as the market seems uncomfortable with the current levels and unsure which way to jump holding just below 1.5500 as we head to London.
  • JPY: A steady opening for the USDJPY moving slowly higher in pre-Tokyo trading opening around the 96.35 area we moved into the Tokyo market just above the 96.50 area and the market started to see good buying flowing in from leveraged types, fixing demand for end of week pushed the market to above 96.80 and a follow through with AUDJPY carry trade buying helped to move the market to above 96.90 before drifting back off once the flow was over with. We held around the 96.65 level. A move in the AUDUSD initially set the USDJPY lower before it again started to push towards the 96.90 level and while the market has quietened down at the moment the volumes have been rather brisk for the second day on a trot.
  • AUD: The Oz opened around the 0.9000 level and traded quietly in Pre Tokyo with CNY trade balance to come. Once Tokyo opened there was a flurry of action on the AUD employment numbers with the number unchanged against an expected rise. Having gapped slightly higher on the number the market then revised its movement triggering some weak stops and touching close to 89.70 before a steady recovery. The release of the China data was eventful while the headline number was poor with the Trade balance hitting below expectations the expected small rise in imports became a larger than expected one, and guess which horse was carrying the iron and coal. The expected rise in imports of 1% turned into 10.9% negating the poor trade balance and obviously was to blame for the difference. The Oz moved quickly from the 0.9015 area to above 0.9070 stopping just short of 0.9080 and holding towards the highs as we move towards London. Noticeable amounts of A$ bonds bought giving rise to AUDJPY buying in size.

 

Today’s data

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

CNY        Trade Balance Jul A $17.82B | C $25.90B | P $27.12B

JPY         Current Account (JPY) Jun A 0.646T | C 0.73T | P 0.62T

JPY         Trade balance BOP basis (Yen) Jun A -139.2B | -128.7B | -906.7B

AUD       Employment Change Jul A -10.2K | C 6.0K | P 10.3K

AUD       Unemployment Rate Jul A 5.70% | C 5.80% | P 5.70%

JPY         Eco Watchers Survey: Current Jul A 52.3 | C 53.5 | P 53

05:45     CHF        Unemployment Rate Jul C 3.20% | P 3.20%

06:00     EUR        German Trade Balance (EUR) Jun C 15.2B | P 14.1B

08:00     EUR        ECB Publishes Monthly Report

12:30     CAD       New Housing Price Index M/M Jun C 0.30% | P 0.10%

12:30     USD       Initial Jobless Claims (AUG 3) C 335K | P 326K

 

Interbank Ranges as of 6am London time

Highs    Lows

EURUSD               1.3344 | 1.3328

JPYUSD                 96.955 | 96.325
GBPUSD               1.5502 | 1.5485
USDCHF               0.92295 | 0.9209
AUDUSD              0.9078 | 0.8972
NZDUSD               0.7972 | 0.7935
USDCAD               1.0431 | 1.0416
EURCHF                1.2304 | 1.22885
EURGBP               0.8613 | 0.8604
EURJPY                 129.23 | 128.46

Good luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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