Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 98.992 | EURUSD 1.34888 | EURJPY 133.523 | AUDUSD 0.9363 | NZDUSD 0.8284 | USDCAD 1.03097 | EURCHF 1.22779 | USDCHF 0.91027 | GBPUSD 1.60402 | EURGBP 0.84088 |

 

Harry Hindsight

  • EUR: After opening around the 1.3525 area the market held for the most part in a tight range given the amount of movement the market had in USDJPY in particular, with cross trading dominating the Euro with both EURJPY selling early in the session and then EURAUD buying. We moved to a low around the 1.3513 levels and high early in the session to above 1.3536. While volumes were decent through Asia the movement to the topside was rarely above the opening level and we only maintained the opening and the market was reluctant to push ahead. The move into London saw the market dropping quickly off from those levels as the Eurozone money expanded more than expected pushing the market down to the 1.3505 levels before pausing and then dropped again this time causing a minor selloff to the 1.3485 levels where the first supporting bids appeared. The Italians again seem to be falling apart with law makers opposing the former premier’s expulsion (Berlusconi). I’m more inclined to believe that having stalled above the 1.3530 level for the past few days we now try lower before attempting another move higher. The move into NYK saw the release of some mixed results, with in particular a reduced GDP number, while this would normally see the USD move lower it was balanced with thoughts that at this point tapering is not likely to occur if GDP is moving in the wrong direction. We dropped to below the 1.3475 level before stabilizing and then moving back towards the 1.3490 area into the close.
  • GBP: As the market opened around the 1.6080 levels, the Cable held as the Euro in a tight range until the London opening, trading in Asia between 1.6085-1.6068 with mixed movement driven by the Euro’s movement. The release of the UK numbers saw and increase of the current account however, this was balanced by an unchanged GDP number causing a minor rally to above the 1.6095 level, meeting some resistance, the Italian story that upset the Euro saw the GBP becoming involved with some movement in the EURGBP cross to the topside moving to just below 0.8430 for a 33 pip rise from its lows. Like the Euro the market paused before the NYK market opened unable initially to move cleanly through the 1.6040 area with any conviction however, the US numbers put paid to the support and we dropped steadily over the session to the 1.6000 before recovering to that 1.6040 area for the close. Good leveraged types were seen selling throughout the day.
  • JPY: Pension fund revisions moving from onshore vehicles to more risky off shore ones added to which talk of lowering corporation tax to balance the sales tax is being talked of and the market reacted quickly to the chatter, with a slow start initially opening around the 98.45 level the market had done nothing of note as we hit supply for the Tokyo fix dropping the market to the 98.27 level and then off we went to the races. The market rose quickly not touching any sides until we ran into a set of decent offers from the 99.10 level, leveraged sellers moved into the market having observed the struggle above 99.10 and we saw the market drop back to the 98.70 level however, the big Japanese banks had not yet finished buying and we renewed acquaintance with that 99.10 level, with a lot of volume going through in two way trading between leveraged, retail against the big ones. The action above 99.00 continued into the London session and only EURJPY selling put a stop to the market action, with what one could assume safe haven flows into the JPY from Europe on the Italian job. The market was forced lower to just above the 98.50 level before seeing a steady rise again with the opening of the NYK session and the release of the US numbers. Again the market touched above the 99.10 level before settling into a sideways market with a minor dip to 98.80 before finishing the day around the 99.00 level.
  • AUD: The Oz had a rollercoaster day moving quietly initially from the opening 0.9370 as the USDJPY strengthened the Oz dropped back to push below the 0.9350 before AUDJPY buying moved into the market as retail players began to think about another move to above 100.00 taking the Oz back to touch above the 0.9400 levels into the London session. With the USDJPY stalling repeatedly around those 99.10 levels the market AUDJPY longs decided caution was more of an idea than staying long and the Oz started to move back steadily into the NYK session pushing through the Asian lows to trade just above the 0.9340 level where some weak support bids kicked in added to some profit taking from range players. The market rose in the last few hours recovering most of its losses to finish the day only just short of the opening levels.

Yesterday’s premiership results

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

EUR        Eurozone M3 Y/Y Aug A 2.30% | C 2.20% | P 2.20%

GBP       Current Account (GBP) Q2 A -13.0B | C -10.0B | P -14.5B

GBP       GDP Q/Q Q2 (F) A 0.70% | C 0.70% | P 0.70%

USD       Initial Jobless Claims (SEP 20) A 305K | C 319K | P 309K

USD       GDP (Annualized) Q2 (T) A 2.50% | C 2.70% | P 2.50%

USD       GDP Price Index Q2 (T) A 0.60% | C 0.80% | P 0.80%

USD       Pending Home Sales M/M Aug A -1.60% | C -1.00% | P -1.30%

 

For today
USDJPY:
Topside: 99.10-99.25 medium offers 99.25-99.50 light stops  99.50-99.80 light offers 99.80-100.10 medium offers
Downside: 98.60-98.70 light mix 98.40-98.60 light sell stops 98.10-98.40 light bids

EURUSD:
Topside: 1.3510-1.3540 light buy stops 1.3540-1.3580 light buy stops 1.3590-1.3630 medium buy stops
Downside: 1.3430-1.3460 light bids 1.3400-1.3430 medium bids 1.3360-1.3380 light sell stops

AUDUSD:
Topside: 0.9400-0.9430 light buy stops 0.9450-0.9470 light offers 0.9500-0.9520 medium offers
Downside: 0.9325-0.9335 light bids 0.9300-0.9325 light mix 0.9250-0.9275 light bids

 

JPY:

Japan’s Aso: not thinking of lowering effective corp tax rate now

Japan EcoMin: Wages need to rise to end deflation

Japan Aug Core CPI +0.8% On Year; Mkt Expected +0.7%

Japanese Bought Net 174.8 Billion Yen Overseas Debt Last Week

USD:

Fed’s George Says Clear Job Gains Warrant Tapering Bond Buying

U.N. Security Council could vote Friday on Syria resolution -U.S.

CNY:

China August industrial profits up 24.2% YoY

CNY/AUD:

China restricts imports of Australian chilled beef

AUD:

Australia to raise A$300bn national debt ceiling before Christmas

GBP:

UK Consumer Confidence Reaches Pre-Crisis High

BOE to Consider Recovery outside London in Rate Decisions: Echo

NZD:

RBNZ Says NZ$ Has Fallen Recently, Remains Elevated

RBNZ Board Says Bank Has Met Core Inflation Requirement

 

 

  • EUR: No change for the Euro during Asia with the market opening around the 1.3488 level a slow rise to just above the 1.3490 level in pre-Tokyo before the market started to slip to its lows over the course of 3 hours touching the 1.3475. EURJPY selling seemed to be largest part of the move down and USDJPY slipped lower a weaker USD overall allowed the Euro to creep back towards the highs as we approach the grey hours holding just below the 1.3490.
  • GBP: Similar range for Cable as with the Euro, moving from the opening levels the market held the 1.6038/40 level until USDJPY started to move lower, light selling GBPJPY cross accomplished the low trading just above the 1.6030 level however, once the light selling finished the market moved back to move to new highs holding around the 1.3550 levels.
  • JPY: USDJPY moved from the opening levels around 99.00 to test the resolve of the topside however, without the impetus of leveraged break out players and the big banks the move was destined to fail and retail selling quietly dampened the move and we started to fall back, we dropped initially to the 98.80 level a sticking point yesterday and then completed the move after a couple of hours trading. CPI numbers were mixed but on the whole better than expected when excluding Tokyo itself. Abe was speaking in NYK and while nothing major was stated it seemed to help in the rise for the Yen with the market dropping back to a low around the 98.67 area with AUDJPY selling kicking in. for the moment we are still trying the downside as we move to the grey hours.
  • AUD: The AUD rose slightly from the opening with some minor AUD cross buying however, once into Tokyo the moves above 0.9365 faded and fixing supply in AUDJPY sent the market momentarily lower before recovering, with the USDJPY falling off to the 98.85 area the market in AUD again pushed higher to the 0.9375, comments from ANZ on the subject of property bubbles seemed to coincide with a general  round of selling in both AUD and AUDJPY in particular and the market pushed through yesterday’s holding areas of 93.40 before the supply was slowly absorbed by bids spread around the market, nothing large just a goodly number of them in different places. For the moment the market holds just above the 0.9345 area as we move towards London.

Today’s data

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

GBP       GfK Consumer Sentiment Sep A -10 | C -11 | P -13

JPY         National CPI Core Y/Y Aug A 0.80% | C 0.70% | P 0.70%

JPY         Tokyo CPI Core Y/Y Sep A 0.20% | C 0.30% | P 0.40%

07:00     CHF        KOF Leading Indicator Sep C 1.46 | P 1.36

09:00     EUR        Eurozone Economic Confidence Sep C 95.9 | P 95.2

09:00     EUR        Eurozone Industrial Confidence Sep C -7 | P -7.9

09:00     EUR        Eurozone Consumer Confidence Sep (F) C -15 | P 14.9

09:00     EUR        Eurozone Services Confidence Sep C -5 | P -5.3

12:00     EUR        German CPI M/M Sep (P) C 0.00% | P 0.00%

12:00     EUR        German CPI Y/Y Sep (P) C 1.50% | P 1.50%

12:30     USD       Personal Income Aug C 0.40% | P 0.10%

12:30     USD       Personal Spending Aug C 0.30% | P 0.10%

12:30     USD       PCE Core M/M Aug C 0.10% | P 0.10%

12:30     USD       PCE Core Y/Y Aug C 1.20% | P 1.20%

12:30     USD       PCE Deflator M/M Aug C 0.10% | P 0.10%

12:30     USD       PCE Deflator Y/Y Aug C 1.20% | P 1.40%

13:55     USD       U. of Michigan Sentiment Sep (F) C 78 | P 76.8

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               99.045 | 98.655

EUR/USD             1.3491 | 1.3474

EUR/JPY               133.57 | 133.01

AUD/USD            0.9375 | 0.9333

NZD/USD             0.8297 | 0.827

USD/CAD             1.0322 | 1.0309

EUR/CHF              1.2279 | 1.2265

USD/CHF             0.9111 | 0.9092

GBP/USD             1.6054 | 1.6030

EUR/GBP             0.8410 | 0.84015

 
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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