Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 99.744 | EURUSD 1.32072 | EURJPY 131.736 | AUDUSD 0.91732 | NZDUSD 0.79092 | USDCAD 1.04957 | EURCHF 1.23543 | USDCHF 0.93534 | GBPUSD 1.5625 | EURGBP 0.84525 |

 

Harry Hindsight

  • EUR: The Euro spent most of the day flat lining until we moved closer to the NYK opening, having opened around the 1.3170 level the market traded between the 1.3165-1.3175 for most of Asia, moving into the London around its highs before dipping to below the 1.3160 level after the Italian PMI figures showed now respite, while the market didn’t particularly change that much the range increased slightly touching above the 1.3185 level with the subsequent data being ignored. Syria rumours and news items still remain in the forethought of the market and senate agreement for limited strikes against Syria, one assumes if they can swing the Russians behind it. The Euro rallied from the 1.3165 moving quickly to above the 1.3215 level before holding around the 1.3205 areas into the close.
  • GBP: The Cable held steady during the Asia session opening around the 1.5560 area for most of the session, the move towards London opening saw some limited buying moving into the market before the due PMI services number which when released showed the same type of increase as previous numbers and the market moved quickly to above the 1.5630 level before a steady drift back to the figure on some minor profit taking. During the NYK session we saw Cable option strategies disappearing from the market leading to covering in Delta and sending the market again higher to just below 1.5650, from there the market stalled a little and volumes dropped off and dropped into the close around the 1.5625 levels.
  • JPY: With similar ranges to yesterday the market struggles with the current levels with the topside covered with barriers and retail buyers sitting on the downside. We opened around the 99.60 level and struggled a little higher before dropping a little during the fix before starting a steady climb to the 99.80 before running into the first level of barriers, and rejecting the level as we moved into the London session. We dropped away from the highs moving to below the 99.35 area into the early London session before the market moved steadily higher in the NYK session. We again moved steadily higher with retail buyers jumping on the market, focus still remains on the expected sales tax, of note Goldman’s raised its expectations for QoQ GDP to 3.7%. The market eventually ran out not far from its highs.
  • AUD: Early trading was weak dipping to below the 0.9040 level on the GDP numbers before spiking higher to above the 0.9090 level, from there the market steadied before moving into the London session where the market began a steady rise through the session on the back of said numbers. By the time we moved into the NYK session the market stalled and drifted into a quiet close having failed to move through the 92c level. The move higher is the belief by the market that any more rate cuts are moving further away and so the carry trade moves back into the minds of the retail players.

 

Yesterday’s premiership results

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

GBP       BRC Shop Price Index Y/Y Aug A -0.50% | P -0.50%

AUD       GDP Q/Q Q2 A 0.60% | C 0.60% | P 0.60% | R 0.50%

EUR        Italian PMI Services Aug A 48.8 | C 49.2 | P 48.7

EUR        Eurozone PMI Services Aug (F) A 50.7 | C 51 | P 51

GBP       PMI Services Aug A 60.5 | C 59.8 | P 60.2

EUR        Eurozone GDP Q/Q Q2 (P) A 0.30% | C 0.30% | P 0.30%

EUR        Eurozone Retail Sales M/M Jul A 0.10% | C 0.50% | P -0.50% | R -0.70%

USD       Trade Balance Jul A -39.1B | C -$38.7B | P -$34.2B

CAD       Trade Balance (CAD) Jul A -0.9B | C -0.40B | P -0.47B

CAD       BoC Rate Decision A 1.00% | C 1.00% | P 1.00%

 

For today

USDJPY
Topside: 100.00-100.10 medium offers  100.20-100.40 medium stops 100.40-100.50 large offers
Downside: 99.20-99.40 light sell stops 98.80-99.10 medium sell stops 98.50-98.80 medium sell stops

EURUSD
Topside: 1.3210-1.3240 light buy stops  1.3240-1.3270 light buy stops 1.3280-1.3300 medium offers
Downside: 1.3170-1.3200 light bids 1.3140-1.3160 light mix 1.3050-1.3100 light bids

EURJPY
Topside: 132.20-132.50 light offers
Downside: 131.20-131.50 light sell stops

AUDUSD
Topside: 0.9200-0.9240 light buy stops 0.9240-0.9285 medium offers 0.9300-0.9320 light offers
Downside: 0.9120-0.9150 light bids 0.9100-0.9120 light bids 0.9040-0.9085 medium bids

 

JPY:

BOJ keeps policy steady, says economy recovering

Japan investors net sellers of foreign bonds for third straight week

Abe’s LDP May Implement Corp Tax Cut Next FY, Nikkei Says

CNY:

PBOC’s Hu: China Growth Still Unbalanced

PBOC Research Head Says China Rebound Has ‘Internal Dynamics’

China CB urges joint efforts to curb financial risks

AUD:

Australia Posts Unexpected Trade Deficit

 

  • EUR: Euro’s slowly drifted from the opening levels around 1.3208 levels moving into Tokyo dropping through the figure and triggering some minor stops on its way. The market held the figure area for a couple of hours before drifting steadily to below 1.319. If I didn’t know better I’d have said it was a bank holiday. We look to be heading towards the grey hours in that area.
  • GBP: Like the Euro the market drifted from the opening moving from the 1.5626 area to touch below 1.5208 before recovering a little as GBP continues to hold better than the Euro. Volumes have been extremely low and the market currently holds in the mid-teens.
  • JPY: USDJPY remains stymied for the moment with very little movement in the market, expected no change from BoJ or tone really and the market has remained between the 99.65-99.82 during the session with limited movement so too were the volumes for the day until the run into the grey hours, where the market ran to above the 99.90 level in a quick movement on the back of US 10yr yields moving to 2.915%
  • AUD: The Oz struggled during the session with a minor move higher with AUDJPY buying kicking in during the Tokyo session to 0.9188, before dropping a little to the 0.9155 to make the range for the day, while the session overall has been very quiet this has seemingly been the better pair to have played with.

 

Today’s data

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

JPY         BoJ Rate Decision A 0.10% | C 0.10% | P 0.10%

AUD       Trade Balance (AUD) Jul  A -0.77B | C 0.11B | P 0.60B

11:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

11:00     GBP       BoE Asset Purchase Target C 375B | P 375B

11:45     EUR        ECB Rate Decision C 0.50% | P 0.50%

12:15     USD       ADP Employment Change Aug C 180K | P 200K

12:30     USD       Initial Jobless Claims (AUG 30) C 330K | P 331K

12:30     USD       Non-Farm Productivity Q2 (F) C 1.40% | P 0.90%

12:30     USD       Unit Labour Costs Q2 (F) C 1.00% | P 1.40%

14:00     USD       Factory Orders Jul C -3.50% | P 1.50%

14:00     USD       ISM Non-Manufacturing Composite Aug C 55 | P 56

15:00     USD       Crude Oil Inventories P 3.0M

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               99.93 | 99.635

EUR/USD             1.3209 | 1.31845

EUR/JPY               131.76 | 131.49

AUD/USD            0.9188 | 0.9154

NZD/USD             0.7914 | 0.7885

USD/CAD             1.0500 | 1.0480

EUR/CHF              1.2367 | 1.23525

USD/CHF             0.9380 | 0.9352

GBP/USD             1.5626 | 1.5604

EUR/GBP             0.8454 | 0.8445
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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