Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 97.64 | EURUSD 1.33397 | EURJPY 130.245 | AUDUSD 0.89408 | NZDUSD 0.77947 | USDCAD 1.04878 | EURCHF 1.22991 | USDCHF 0.92206 | GBPUSD 1.55266 | EURGBP 0.85914 |

 

Harry Hindsight

  • EUR: The Euro opened just above the 1.3390 area holding in a close range for the most part around that area and failing to move above the 1.3400 level in the one attempt higher, before slowly starting to decline towards the grey hours. The move into London didn’t improve matters and the market continuing to fall slowly pushing down through the 1.3360 triggering some minor stops to fall to 1.3340 as we moved into the NYK session with volumes down on previous days at this point. We saw a minor rally pre the numbers, only to be met with comments from BoE’s Carney triggering a quick drop in the EURGBP and taking the Euro to the lows for the day below the 1.3310 and improving the volumes and interest in the market. Euro seems to be side lined for the moment as safe haven hunting continues on the back of the Syrian situation, and while Europe may be insulated to some extent it is not attracting those safe haven funds. From the drop the market slowly recovered over the balance of the session to settle around the 1.3340 level.
  • GBP: With risk adverse sentiment affecting the market the only products seeing rises during the Asian session were commodities and JPY as funds moved away from anything connected to the UN Security Council meeting that was taking place. Cable opened around the 1.5545 and peaked briefly above the 1.5550 levels before the Tokyo market entered the fray and JPY started to strengthen as flows preferred the safety of that and Gold in particular. By the time we reached the grey hours the market had declined to the 1.5520 area not so much a large drop more a indicative of things to come as the steady move continued into the London session and through to NYK. Comments from BoE’s Carney, giving the impression that it would be no change with the addendum that would affect the recovery had the market initially spiking lower as a now change to interest rates before jumping higher as EURGBP selling impacted the market and GBP buying overall as a sign that the “forward guidance had already reached its limits and a rise would likely occur sooner rather than later. The market leapt to above the 1.5550 level before dropping back to a more comfortable 1.5520 level and a quiet end to the session holding around the levels into the close. EURGBP dropped from the high above 0.8650 to touch below 0.8575 for an expensive move for any longs.
  • JPY: USDJPY gradually moved higher from the previous days safe haven flows with reinvestment of flows going more into commodities than anything else. Early trading saw the market moving from the early highs above 97.15 down through the opening 97.05 area to trade into the Tokyo session and a quick move to make the lows in the low 96.80’s, with a steady decline in most of the currencies against the USD which struggled higher, USDJPY pushed steadily over the course of the day having been contained in Asia below 97.30, early buyers in London started to pick up pushing the market above 97.40 before running into offers and stalling the market which set a pattern over the day and we ended pushing to above 97.80 and holding around the 97.70 levels into the close. We saw Japanese buying strongly through the day with several funds as well as retail jumping on the back of lower levels as AUDJPY and NZDJPY carry trades became more attractive.
  • AUD: As the JPY strengthened we saw the carry trade dropping being sold with margins squeezed from the opening in Tokyo, with the AUD dropping from the opening levels above 0.8980 moving into Tokyo and falling to below 0.8930 quickly before holding and then continuing the move late into the session before holding just above the 0.8900 level into the London market. The market then stalled throughout the session before attempting the 0.8900 level for the second time into early NYK after the US data release touching into the mid 0.8890’s before seeing carry trade buying kicking in from the lows. The AUD pushed back to above the 0.8940 before holding into the close.

 

Yesterday’s premiership results

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

CHF        UBS Consumption Indicator Jul (P) A 1.41 | P 1.44

EUR        German GfK Consumer Sentiment Sep A 6.9 | C 7.1 | P 7

EUR        Eurozone M3 Y/Y Jul A 2.20% | C 2.00% | P 2.30% | R 2.40%

GBP       CBI Reported Sales Aug A 27 | C 20 | P 17

USD       Pending Home Sales M/M Jul A -1.30% | C 0.10% | P -0.40%

USD       Crude Oil Inventories A 3.0M | C 0.5M | P -1.4M

 

For today

USDJPY
Topside: 97.80-98.10 light offers  98.20-98.50 light offers 98.80-99.00 light offers 99.00-99.20 light buy stops
Downside: 97.30-97.60 medium bids 97.00-97.30 medium sell stops 96.40-80 light bids 95.80-96.00 light bids 95.60-95.80 medium stops

EURUSD
Topside: 1.3350-1.3380 light mix 1.3360-1.3380 light offers  1.3380-1.3410 medium buy stops
Downside: 1.3270-1.3320 light bids 1.3230-1.3260 light bids

EURJPY
Topside: 130.50-130.80 light buy stops
Downside: 129.80-130.10 light sell stops

AUDUSD
Topside: 0.8960-0.8990 light offers 0.9000-0.9025 light stops 0.9050-0.9075 offers
Downside: 0.8860-0.8900 light mix 0.8800-0.8820 light stops

 

USD:

Yellen Downplays Her Chances of Getting Top Fed Post

Obama says has not made a decision on Syria military strike PBS

USD/GBP:

Verizon, Vodafone restart talks on $100 bln-plus deal -WSJ

JPY: Abe Ally Favors Corporate-Tax Cut to Blunt Sales-Levy Increase

BOJ Morimoto: Growth To Exceed Potential Rate Even With Tax Hike

BOJ’s Morimoto: fund outflows from emerging nations may continue

Japanese Sold Net 318.5 Billion Yen Overseas Debt Last Week

Japan Jul Overall Retail Sales -0.3% On Year

Abe to Speak on Eco. Policies at Wall Street in Sept.: Nikkei

CNY:

China PBOC to Prioritize ‘Good’ Credit Assets for Securitization

China urges restraint over Syria tensions

AUD:

Australia Q2 business investment beats forecasts

Australia new homes sales dip in July after 5 months of gains

NZD:

N.Z. August Business Confidence Remains Elevated, ANZ Says

 

 

  • EUR: Another quiet day in paradise, the market opened around the 1.3340 and struggled in a very tight 5 pip range into Tokyo before we started to see some movement, Tokyo fix initially sent the market a little lower and what movement we had was down to 1.3325 area before bouncing back to the opening levels with volumes vastly lower than previous days. For the moment with the world watching for any movement on Syria we are likely to jump, stall and ignore lots of other stuff. We’ve slipped into the grey hours back to the lows and hold just above the 1.3320’s
  • GBP: Cable initially followed the Euro moving from the opening levels around the 1.5530 and dropping once the market moved into Tokyo to just below 1.5520 however unlike the Euro the market moved higher later in the session as Middle Eastern buying took the market back above the opening to just below the 1.5550 level in a rather illiquid move. For the moment we hold just above the 1.5530 level as we head towards the London open.
  • JPY: Early trading took the market in USDJPY from the 97.65 area into the Tokyo session almost flat before beginning to rise in the Tokyo session to above the 97.90 helped by a weaker retail trade figure, having touched those highs offers from there onwards stopped the market while they appear small they seem to be spread around the market. We pulled back from the highs and started to slide back in what appeared to be an attempt more to test the downside having failed the top. We dropped to below 97.50 before again finding sufficient volumes to hold the market and we’ve stalled and slowed since holding, as we moved closer to the grey hours the market again moved towards the 97.75 area.
  • AUD: A steady rise higher with the market opening around the 0.8940 to above the 0.8970 levels before stalling and holding around the levels in very quiet trading with only weak buying of the carry trades and Oz in general. For the moment we hold around the highs with little to going on.

 

Today’s data

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

JPY         Retail Trade Y/Y Jul A -0.30% | C -0.10% | P 1.60%

NZD       NBNZ Business Confidence Aug A 48.1 | P 52.8

07:55     EUR        German Unemployment Change Aug C -5K | P -7K

07:55     EUR        German Unemployment Rate Aug C 6.80% | P 6.80%

12:00     EUR        German CPI M/M Aug (P) C 0.10% | P 0.50%

12:00     EUR        German CPI Y/Y Aug (P) C 1.70% | P 1.90%

12:30     USD       GDP (Annualized) Q2 C 2.30% | P 1.70%

12:30     USD       GDP Price Index Q2 C 0.70% | P 0.70%

12:30     USD       Initial Jobless Claims (AUG 23) C 329K | P 336K

12:30     CAD       Industrial Product Price M/M Jul C 0.40% | P 0.30%

12:30     CAD       Raw Materials Price Index M/M Jul C 1.20% | P 0.30%

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY             97.91 | 97.45

EUR/USD             1.3343 | 1.3323

EUR/JPY             130.51 | 130.00

AUD/USD             0.8977 | 0.8935

NZD/USD             0.7840 | 0.7799

USD/CAD             1.0496 | 1.0480

EUR/CHF             1.2314 | 1.2299

USD/CHF             0.9248 | 0.9219

GBP/USD            1.5548 | 1.5517

EUR/GBP            0.8589 | 0.8578

Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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