Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 98.845 | EURUSD 1.34924 | EURJPY 133.372 | AUDUSD 0.94302 | NZDUSD 0.8382 | USDCAD 1.0284 | EURCHF 1.22916 | USDCHF 0.91094 | GBPUSD 1.60424 | EURGBP 0.84104 |

 

Harry Hindsight

  • EUR: Opening with a gap higher on the back of pre-market EURAUD buying the Euro hit around the 1.3547 area before falling back to fill the gap as the markets settled down for a dull Asian session with the Japanese taking a day off from the heady Asian markets. The market traded in a very tight range in Asia as you’d expect with a low of 1.3520 areas and a high as we moved into London just below the opening level. The steady stream of poor PMI numbers from the Eurozone set the market back, with the Euro trading quickly to below the 1.3505 before holding on bids and a second move linked more with EURGBP selling this time to push the market the final 5 pips to look just below the figure. The market then remained in a 20 pip range for the next couple of hours into the NYK session where the selling renewed and the market traded to a low of 1.3480. With the German election all but over, Angela Merkel remaining in power if she can find a compliant partner for the overall majority for a successful term ahead, the market suffered from the numbers more than anything with mutterings still continuing in Italy and Liikanen on the wires again trying to undo his weekend comments and while the dreaded forward guidance words rise in everyone’s mouth the clarity from Europe is like looking at your own money through the window of a garden shed, you know it’s not safe but seem comforted by the blurry vision. Draghi mention the use of another LTRO obviously in response to the US not tapering for the time being, yes I’m a cynic but we’ve seen this verbal intervention and movements to and fro for far too many years. For the moment the market is closing in the low 1.3490’s just off the lows with very little in data for the coming Asian session.
  • GBP: The Cable rallied for the most part over the course of the day with a very quiet grind higher in Asia, with an opening in line with Friday’s close the market dipped to its lows as the market in general reset after pre-market shuffling in AUD, JPY and the Euro. From the 1.5995 levels the market barely looked back rising steadily in Asia to peak above 1.6030 in what was quiet trading with the Japanese out. We moved into the London session around the mid-market levels and started again to rise in the grey hours and continued through the early part of London to above the 1.6055 level before the first set back being dragged a little lower with the move in London once EURGBP selling had hit its lows and then again moving to a high in early NYK above the 1.6070 level with a fresh move. Some mutterings about the European agricultural policy upset the Euro market however, this would have little impact on the UK and seemed more likely to be profit taking and delta unwinds from expiring options during the hour as the NYK cut passed, taking the market back to the low of NYK before a steady move back to towards the highs again. The market never quiet reached its previous levels however, finished the day firmly in the 1.6040’s into the close.
  • JPY: With the Japanese out for the day, real money seemed to be the only players in the market with exporters seen over the session selling smalls into a light volume market, the market opened around the 99.25 area having opened lower than Friday’s finish with AUDJPY selling in pre-market doing a lot of damage in particular to the AUD market. We filled the gap in early trading and then spent the rest of the session falling with CNY Flash PMI surprising the market and sending the AUD back high and adding strength to the JPY, once the news was absorbed the market stayed moribund basing off the 99.10 all the way into the grey hours where the market dropped through the strong bids 99.00-10 to touch below 98.90 in early London. London remained static for the most part with no real interest showing once the Asian market was firmly asleep and only in NYK did we see the market moving to set the lows just above 98.65 around the NYK cut, there was a brief attempt at a recovery however, this failed to move back above the 99.00 level and having rejected the level fell back to the 98.75 level into the close.
  • AUD: The market gapped open for our session opening around the 0.9370 area having recovered from a pre-market low of 0.9343 after some untidy selling in AUDJPY and buying in EURAUD as a decent clip came to the market. Having recovered the market started to fill in the gap on the charts and rallied over the early part of the session to the 0.9400 levels completing the close on the charts. From that point the market stalled awaiting the CNY PMI number which when it arrived had the Oz moving quickly to above the 0.9430 level. Again the market ran out of players and spent much of the Asian session and the following London session mired in the 0.9420/35 range into the NYK session before rising steadily to the highs above the 0.9455 level. Again the market stopped moving so much and only in the closing 30mins did we start to see some profit taking from Oz locals who’d bought in the pre-market chasing it from above the 0.9340 levels for a close below 0.9430.

Yesterday’s premiership results

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

CNY        HSBC Flash Manufacturing PMI Sep A 51.2 | C 50.9 | P 50.1

EUR        French PMI Manufacturing Sep (P) A 49.5 | C 50.1 | P 49.7

EUR        French PMI Services Sep (P) A 50.7 | C 49.4 | P 48.9

EUR        German PMI Manufacturing Sep (A) A 51.3 | C 52 | P 51.8

EUR        German PMI Services Sep (A) A 54.4 | C 53 | P 52.8

EUR        Eurozone PMI Manufacturing Sep (A) A 51.1 | C 51.6 | P 51.4

EUR        Eurozone PMI Services Sep (A) A 52.1 | C 51 | P 50.7

 

For today

USDJPY
Topside: 98.90-99.20 light mix  99.20-99.50 light offers  99.50-99.80 light offers 100.00-100.20 light offers
Downside: 98.30-98.60 light mix 98.00-98.30 medium bids 97.70-98.00 medium bids

EURUSD
Topside: 1.3520-1.3550 light mix  1.3570-1.3600 light buy stops
Downside: 1.3480-1.3490 light sell stops 1.3460-1.3480 light bids 1.3440-1.3460 light sell stops 1.3420-1.3440 light bids 1.3380-1.3400 light sell stops

EURJPY
Topside: Nothing showing
Downside: 132.70-133.15 light sell stops

AUDUSD
Topside: 0.9430-0.9460 light buy stops  0.9460-0.9490 light mix 0.9490-0.9500 0.9550-0.9570 light buy stops 0.9580-0.9600 medium offers
Downside: 0.9360-0.9390 light bids, very thin below

 

JPY:

BOJ’s Iwata Confident to Meet 2% Inflation Target, Sankei Says

JPY/CNY:

Chinese Activists to Sail to Islets Disputed With Japan: Yomiuri

JPY/KRW:

Japan Govt: Kishida, Yun to Meet Thurs in New York – Kyodo

CNY:

Premier Li Says China So Far Has Chosen Steady Monetary Policy

NZD:

New Zealand’s Fonterra raises pay out guidance for 2014

 

 

  • EUR: Another quiet day in Asia with the market held in a 1.3489/99 range. What movement we’ve seen has been more JPY cross related, with the JPY quietening down the Euro stopped moving so much (jk) and we settled into a 1.3494 area as we move to the grey markets with volumes largely off across all pairings.
  • GBP: While the range has only been a little higher than the Euro the direction has been more certain with the market slowly dropping through the session from the opening 1.6044 area to hold for the moment at 1.6028/29 as we move towards the grey hours with light volumes.
  • JPY: Early cross selling in EURJPY set the tone early on however, this was reversed into the Tokyo fix having dropped from the 98.80 level down into the low 98.70’s the market jumped back to just short of 98.90 before light stops in AUDJPY forced the pair lower taking USDJPY to below the 98.68 level to set the range for the session. For the moment the market has again moved back to the opening areas and holds as we move towards the grey hours.
  • AUD: The market started to drift from the opening around the 0.9430 with AUDJPY selling showing from the start, the markets decline slowed somewhat with the Tokyo fix however, it was short lived and we saw the AUD forced to below the 0.9400 level as light stops in the carry trade were triggered, for the moment the market has bounced and holds around the 0.9415 levels as we move to the grey hours.

 

Another stunning day with very little news and no data, it’s so quiet my usual talkative friends are happy to discuss yesterday’s action rather than what is not happening today.

 

Today’s data

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

08:00     EUR        German IFO – Business Climate Sep C 108 | P 107.5

08:00     EUR        German IFO – Current Assessment Sep C 112.6 | P 112

08:00     EUR        German IFO – Expectations Sep C 104 | P 103.3

08:30     GBP       BBA Mortgage Approvals Aug C 38K | P 37.2K

12:30     CAD       Retail Sales M/M Jul C 0.50% | P -0.60%

12:30     CAD       Retail Sales Less Autos M/M Jul C 0.60% | P -0.80%

13:00     USD       S&P/Case-Shiller Composite-20 Y/Y Jul C 12.50% | P 12.10%

13:00     USD       House Price Index M/M Jul C 0.90% | P 0.70%

14:00     USD       Consumer Confidence Sep C 80.3 | P 81.5

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               98.885 | 98.66

EUR/USD             1.3499 | 1.3489

EUR/JPY               133.405 | 133.14

AUD/USD            0.9428 | 0.9395

NZD/USD             0.8370 | 0.8315

USD/CAD             1.0289 | 1.0277

EUR/CHF              1.22945 | 1.2286

USD/CHF             0.9112 | 0.9104

GBP/USD             1.6043 | 1.6027

EUR/GBP             0.8419 | 0.8411

 
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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