Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 99.115 99.86-88 | EURUSD 1.31791 1.3160-695 | EURJPY 130.624 131.416-537 | AUDUSD 0.91848 0.9202-05 | NZDUSD 0.79984 0.7966-0.8020 | USDCAD 1.04129 1.0402-10 | EURCHF 1.23574 1.2345-70 | USDCHF 0.93765 0.9343-96 | GBPUSD 1.56305 1.5630-40 | EURGBP 0.84316 0.84145-395 |

 

Weekend News

JPY:

Tokyo Gains Rights to Host 2020 Olympics Over Madrid, Istanbul
Aso Says Yen Isn’t Weak Compared With Pre-Lehman 108 Per Dollar
Japan May Revise Tax Incentives to Spur Pay Hikes, Nikkei Says
Fukushima Groundwater Contamination Drops Near Storage Tank
CNY:

China May Cut 2014 Growth Target to 7%, State Economist Fan Says
China’s Export Growth Beats Estimates in Boost to Recovery
China Vice Premier Zhang Urges Push for Economic Transformation
China Studies Policies to Back Overseas Expansion by Automakers
USD:

Kerry, Fabius Cite Growing Support for Strike on Syria
Democratic Senator Pryor Opposes Syria Strike ‘At This Time’
TRY:

Turkey Scrambles F-16s after Blast on Syria Border: Sabah
AUD:

Abbott’s Coalition Wins Australia Poll as Labour’s Rudd Exits
New Australia Government Must Drop Deposit Levy Plan, Banks Say
EUR:

Greek Recession in 2013 to Be Less Than Forecast, Samaras Says
Schaeuble Says Debt Cut for Greece Would Be Wrong: Welt Report
Greece May Receive EU1bn of Unused EU Aid, WirtschaftsWoche Says
Alumina Says EU, Italy Agree on Paschi Capital Increase
ECB’s Mersch Says Will Take Time to Leave Crisis Behind: Presse
GBP:

BOE’s Fisher Says ‘Policy Is Finally Kicking In’: Sunday Times
U.K. Government May Sell Part of Lloyds Stake within Days: Sky

 

Harry Hindsight

  • EUR: The market in Asia opened quietly around the 1.3120 level and moved quietly into the Tokyo session without too much of a change only beginning to rise as we moved further into the session. We peaked just short of the 1.3140 level before ranging around the 1.3130 level in quiet trading.  The early market in London was little different until the German IP numbers which set the market lower touching to below the 1.3110 rebounding off the level and then into the US numbers. The market moved quickly higher to just below 1.3180 before dropping quickly back before a steady climb to just below 1.3190 and then struggling for the balance of the session 1.3160-80. The reaction to the numbers was more in reply to the dovish comments by Evans, despite the fact that the collar gives away his true colours and went on about the tapering expected later in the year and the need to see inflation accelerate. Overall the few hours around the numbers saw heavy volume changing hands and while it was hectic for a time the market remained in a reasonable range. Also of note was a drop in the unemployment.
  • GBP: Cable was very little different to the Euro, rising steadily from the 1.5590 level to hold for a good portion of the Asian session around the 1.5610 area in quiet. Once we moved into the London market we started to move lower in waves with UK IP and MP numbers mixed. The market moved steadily lower to trade below the 1.5570 levels. US figures had the market rebounding and moving quickly to spike above 1.5680 before dropping to hold around the 1.5630 level for the rest of the session
  • JPY: The USDJPY moved in a similar fashion as the rest of the market with USD dropping slightly during the Asian session. Moving from the 100.10 area to peak in pre-Tokyo above the 100.20 levels a steady drop back to the 99.80 level as we moved into the Tokyo session. The market then held between 99.80-60 deep into the London session and only the US numbers and comments from Evans moved the market below those levels. We dropped to below 98.80 initially before performing another leg lower to touch 98.60. The market then started a slow recovery higher as the market saw Real money and macro names buying into the late session to finish the day back above the 99.10 area.
  • AUD: The Oz was limited in action through the Asian session moving from the 0.9120 to just below 0.9150 levels into the London session. The market eventually broke higher in early London pushing steadily to above 0.9175 before the US numbers with buying coming into the market from leveraged funds and retail types. US numbers took the market to just below the 0.9220 and holding above the 0.9200 for several hours before drifting lower into the last couple of hours for a close below 0.9190 in what became quiet trading.

Friday’s premiership results

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

JPY         Leading Index Jul (P) A 107.8 | C 107.9 | P 107.2

EUR        German Trade Balance (EUR) Jul A 14.5B | C 15.9B | P 15.7B | R 15.8B

CHF        Foreign Currency Reserves Aug A 434.2B | C 434.9B | P 434.3B

CHF        CPI M/M Aug A -0.10% | C 0.00% | P -0.40%

CHF        CPI Y/Y Aug A 0.00% | C 0.00% | P 0.00%

GBP       Industrial Production M/M Jul A 0.00% | C 0.20% | P 1.10% | R 1.30%

GBP       Industrial Production Y/Y Jul A -1.60% | C -1.70% | P 1.20% | R 1.40%

GBP       Manufacturing Production M/M Jul A 0.20% | C 0.30% | P 1.90% | R 2.00%

GBP       Manufacturing Production Y/Y Jul A -0.70% | C -0.80% | P 2.00% | R 2.10%

GBP       Visible Trade Balance (GBP) Jul A -9.9B | C -8.2B | P -8.1B | R -8.2B

EUR        German Industrial Production M/M Jul A -1.70% | C -0.30% | P 2.40% | R -2.00%

USD       Change in Non-farm Payrolls Aug A 169K | C 173K | P 162K | R 104K

USD       Unemployment Rate Aug A 7.30% | C 7.40% | P 7.40%

CAD       Net Change in Employment Aug A 59.2K | C 20.0K | P -39.4K

CAD       Unemployment Rate Aug A 7.10% | C 7.20% | P 7.20%

CAD       Labour Productivity Q/Q Q2 A 0.50% | C 0.30% | P 0.20% | R 0.10%

GBP       NIESR GDP Estimate Aug A 0.90% | P 0.70%

CAD       Ivey PMI Aug A 51 | C 55.1 | P 48.4

 

For today

USDJPY:
Topside: 100.10-100.40 decent offers 100.40-100.70 light buy stops 100.80-101.00 decent offers
Downside: 99.20-99.50 light mix 98.80-99.00 light stops 98.20-98.40 medium stops

EURUSD:
Topside: 1.3200-1.3250 light offers 1.3250-1.3270 light buy stops 1.3280-1.3300 light offers
Downside: 1.3130-1.3160 light bids 1.3100-1.3110 medium bids 1.3090-1.3130 light sell stops 1.3050-1.3080 medium bids

EURJPY:
Topside: 132.00-132.30 light offers
Downside: Nothing of note

AUDUSD:
Topside: 0.9220-0.9240 light buy stops 0.9240-0.9270 medium offers 0.9270-0.9300 light offers
Downside: 0.9160-0.9170 light bids 0.9120-0.9140 light bids

 

JPY:

Japan Q2 GDP revised up sharply, boosts case for tax hike

Japan’s Amari: Revised GDP data positive sign for sales tax hike

Amari: Abe Will Decide on Japan Sales-Tax Increase on Oct. 1

Fukushima Radiation Problems Credit Negative for Japan: Moody’s

Japan Jul Current Acct Surplus Y577.3B; Expected Surplus Y497B

Japan Aug bank loans rise 2.0% vs. year ago

Foreign Investors Sold Japan Stocks in August As Econ Reforms Slowed

CNY:

China August CPI +2.6% YoY, PPI -1.6%

China 2012 Total Outbound Investment Rises 17.6% on Year

AUD:

Australia job ads fall 2% in August, 18.5% on year -survey

NZD:

New Zealand house prices at a record in August – QV

NZ’s Key Says Home-Loan Rates Rise on Cash Rate Expectations

 

  • EUR: Another tight range during Asia with the market opening around the mid 1.3170’s before to below 1.3166 into the Tokyo session but holding generally in the 1.3170’s in very quiet trading, we struggled for most of the period and we currently hold around the high 1.3160’s as we run towards the grey hours.
  • GBP: Cable continued to hold up while the Euro drifted lower, pushing from the opening 1.5630 area to steadily trade in a quiet market to above the 1.5645 area, taking almost all the session to get there.
  • JPY: Having finished on its lows, the opening in early Sydney saw the market gap open above the 99.90 level and move to above 100.00 on fund movement with news that the Olympics would be played out in Japan in 2020. Fixing supply turned the market in the Tokyo session and the market started to move from the highs to trade back to just above the 99.50 area where bids appear. The market held the levels and slowly moved back to the 99.70’s where the market currently holds as we head towards the grey hours. Volumes have been brisk with leveraged market whipped a little however; real money and onshore corps’ seem to be the offers above 100 holding the top. GDP numbers initially led to the highs, with the AUDJPY showing good supply on the rises.
  • AUD: The Oz saw a gap on the opening around the 0.9205-10 level before a slow decline into Tokyo speeding as we moved through the fix to drop to below 0.9170 before JPY started to strengthen and relieving the movement in AUDJPY and allowing the Oz to start to rise back towards the 0.9200 level where we hold at the moment.

 

Today’s data

Actual = A Consensus = C  Previous = P Timings GMT

JPY         GDP Q/Q Q2 (F) A 0.90% | C 1.00% | P 0.60%

JPY         GDP Deflator Y/Y Q2 (F) A -0.50% | C -0.30% | P -0.30%

JPY         Current Account (JPY) Jul A 0.33T | C 0.32T | P 0.65T

CNY        CPI Y/Y Aug A 2.60% | C 2.60% | P 2.70%

CNY        PPI Y/Y Aug A -1.60% | C -1.70% | P -2.30%

AUD       Home Loans Jul A 2.40% | C 2.20% | P 2.70%

JPY         Consumer Confidence Index Aug A 43 | C 44.3 | P 43.6

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

06:00     JPY         Eco Watchers Survey: Current Aug C 53.8 | P 52.3

07:15     CHF        Retail Sales (Real) Y/Y Jul C 3.20% | P 2.30%

08:30     EUR        Eurozone Sentix Investor Confidence Sep C -4 | P -4.9

12:30     CAD       Building Permits M/M Jul C 4.40% | P -10.30%

 

Ranges as of 6am London time including Sydney open

Highs    Lows

USD/JPY               100.11 | 99.485

EUR/USD             1.31815 | 1.3157

EUR/JPY               131.85 | 131.055

AUD/USD            0.9222 | 0.9167

NZD/USD             0.8032 | 0.7962

USD/CAD             1.0434 | 1.0396

EUR/CHF              1.2370 | 1.2355

USD/CHF             0.9395 | 0.9370

GBP/USD             1.5646 | 1.5603

EUR/GBP             0.8433 | 0.8419

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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