Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 97.035 | EURUSD 1.33932 | EURJPY 129.96 | AUDUSD 0.89838 | NZDUSD 0.77972 | USDCAD 1.04741 | EURCHF 1.22888 | USDCHF 0.91754 | GBPUSD 1.55466 | EURGBP 0.86152 |

 

Harry Hindsight

  • EUR: Having opened around 1.3370 the market struggled higher during the first portion of the session topping just above the 1.3390 level before talk of imminent strikes on Syria by the US stirred the market a little and for a brief period set the USD higher, the market in the Euro turned lower and back to the starting levels where we held into the grey hours. Early Europeans were seen selling the market in front of the German IFO numbers dropping to just above the 1.3355 level before a slow recover into the London open, once the figures were released there was a brief flirtation with the topside before the market switched perceptions and dropped quickly as rumours ran there course with no real foundation at that time. The German numbers while above expectations I believe were weaker than the market felt comfortable with especially if commodity markets are likely to push at inflation with the Syrian issue specifically affecting the oil market. Having moved to lows just below the 1.3325 level we limped on into the NYK session with reasonable numbers hitting the wires however, confirmation that a US strike against Syria was seriously imminent the market moved to a risk averse setting and we started to see safe haven flows increasing and a steady move away from the USD, the Euro pushed to new highs on the day however, was still unable to penetrate the 1.3400 area and bounced around the 1.3390 level for a great part of the NYK session with liquidity slowly drying up once the London session closed finishing the day just above 1.3390.
  • GBP: Cable initially faired the weather during Asia moving from the opening around the mid 1.5570’s to above the 1.5590 level however, with Syrian news hitting the market dipped to below the opening levels before holding around the 1.5570-80 into the grey hours. At this point the market started to see safe haven flows from the GBP as nervousness appeared in the market with the likelihood of any US strikes against Syria being facilitated or accompanied by UK forces based in the region. The market slid with early Europeans seen selling and they moved the market into the London opening some 20 pips off the opening levels, the rot didn’t stop and we continued to slide to a mid-morning low around the 1.5500 level. Given the Syrian situation we have to wonder how this will impact the “forward guidance” as we are likely to see another blip higher on the inflation front, definitely cramping someone’s style. We held the level into the NYK session before seeing another dip lower triggering some minor stops before recovering after the US data releases to above the 1.5550 level from that point the market was contained in a tight range of 1.5530-50 into the close with volumes and liquidity drying up once the London market closed.
  • JPY: USDJPY saw plenty of selling emerging with safe haven flows buying the JPY continually throughout the day. With little domestic news to affect the market other than the ever rumbling arguments over one set of islands or another market stayed focused on Syria and technical levels as DMA averages were breached in the crosses as well USDJPY, having opened around the 98.50 level we never really saw the highs again and the real selling began as soon as Tokyo opened in a somewhat limited fashion with plenty of early volume changing hands for little movement considering the amounts, we dropped to the 98.05 areas early in the session which held at that point and again later in the grey hours however, as we moved into the London session the market started again with a steady trend lower triggering minor stops below the 98.00 area and again through 97.80. We moved into the NYK session still falling and we didn’t really find a base line till late into the session when London closed holding the 97.00 levels into the close.
  • AUD: With Obama and Rudd discussing world issues, it would seem that the Oz took the brunt of the initial moves on the news out of Syria with the market slowling moving from the highs above 0.9035 to tumble in Tokyo from the 0.9020 area to below 0.8970 triggering stops along the way as AUDJPY selling dominated the market in safe haven flows. We stabilized on the lows and held for the most part into the grey hours when renewed selling entered the market from the Middle east and early Europeans moving the market through the 0.8950 level and then another step to make the lows in London just below 0.8940, from there it was a quiet affair with the market making a slow comeback to finish the day just above the 0.8980 area.

Yesterday’s premiership results

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

EUR        German IFO – Business Climate Aug A 107.5 | C 107 | P 106.2

EUR        German IFO – Current Assessment Aug A 112 | C 111 | P 110.1

EUR        German IFO – Expectations Aug A 103.3 | C 103.1 | P 102.4

USD       S&P/Case-Shiller Composite-20 Y/Y Jun A 12.10% | C 11.90% | P 12.20%

USD       Consumer Confidence Aug A 81.5 | C 79.3 | P 80.3

 

For today

USDJPY
Topside: 97.30-97.50 medium offers  97.50-97.80 medium buy stops  97.80-98.10 medium offers
Downside: 96.70-96.85 light sell stops 96.50-96.70 light sell stops 96.30-96.50 light bids 96.00-96.30 decent bids 96.00-95.80 medium stops

EURUSD
Topside: 1.3400-1.3420 medium buy stops  1.3420-1.3440 medium mix 1.3440-1.3460 light buy stops 1.3460-1.3480 medium buy stops 1.3480-1.3500 light offers 1.3500-1.3520 medium buy stops
Downside: 1.3340-1.3370 light bids 1.3300-1.3330 light bids 1.3280-1.3260 light bids

AUDUSD
Topside: 0.9000-0.9030 light mix 0.9050-0.9080 medium buy stops
Downside: 0.8880-0.8910 medium bids

 

JPY:

Japan PM Abe Won’t Reshuffle Cabinet in Autumn, Jiji Says

JPY: Japan formally raises Fukushima water leak to INES Level 3 incident

CNY:

China to Ensure Steady Economic Growth in 2H: Xinhua

China Should Raise Deposit Rate Ceiling, PBOC Official Writes

Top China planning body to decentralise corp bond approval-report

China leaders fear Bo comeback if sentence is not harsh-sources

AUD:

Australia backs action against Syria, with or without UN approval

Australia Construction Falls in Second Quarter

NZD:

Fonterra products free of botulism bacteria – NZ Ministry

 

 

  • EUR: Another quiet session for the most part in the Euro with it side-lined for the moment as the world watch’s Syria more than anywhere else. The market opened around the 1.3390 area and slowly lost ground ohhh to around the 1.3382 level before having the first attempt of the day towards that 1.3400 which is becoming something of a barrier at the moment and one suspects some option play could be unfolding. Having failed the high’s again we moved back towards the lows as EURAUD profit taking appeared in the market as the AUD dropped, the market eventually broke down through the 1.3380 level as JPY strengthened in Asia and cross selling moved into the market. With suspected margin breaches for the Japanese margin accounts.
  • GBP: A steady drift lower from the opening 1.5545 area peaking just above the 1.5555 level we moved into the Tokyo session with selling appearing in the market with GBPJPY showing as the JPY strengthened across the board. For the moment the market holds around the 1.5520 levels.
  • JPY: USDJPY was contained for the most part in a reasonably tight range opening around the 97.05 area we moved into Tokyo around the 97.15 level and then ran into supply for the Tokyo fix moving the market down to new lows for the weak below 96.85 before finding some support with verbal intervention beginning from the usual quarters. The market then struggled to a high above 97.25 before moving back to the opening levels and holding in a 15 pip range around the open.
  • AUD: Having opened around the 0.8980 level the market remained on the back foot all the way through the session with selling appearing almost from the start of the Tokyo session with AUDJPY showing again, although straight AUDUSD selling did materialise with stops triggered through the 0.8920 level late in the session, again comments from news sources on Syria spooking the market a little and causing flows into the Yen continuing. We held briefly around the 0.8960 levels before finally moving down through the previous lows and steadying around the 0.8910 level into the pre-London part of the session.

 

Today’s data

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

06:00     CHF        UBS Consumption Indicator Jul (P) P 1.44

06:00     EUR        German GfK Consumer Sentiment Sep C 7.1 | P 7

08:00     EUR        Eurozone M3 Y/Y Jul C 2.00% | P 2.30%

10:00     GBP       CBI Reported Sales Aug C 20 | P 17

14:00     USD       Pending Home Sales M/M Jul C 0.10% | P -0.40%

14:30     JPY         Crude Oil Inventories P -1.4M

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               97.305 | 96.81

EUR/USD             1.3398 | 1.33735

EUR/JPY               130.15 | 129.66

AUD/USD            0.8985 | 0.8904

NZD/USD             0.7808 | 0.7747

USD/CAD             1.0497 | 1.0475

EUR/CHF              1.2292 | 1.2282

USD/CHF             0.9186 | 0.9171

GBP/USD             1.5551 | 1.5517

EUR/GBP             0.8620 | 0.8612

Good Luck

Andy

 

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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