Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.572 | EURUSD 1.36119 | EURJPY 138.255 | AUDUSD 0.93992 | NZDUSD 0.87861 | USDCAD 1.06775 | EURCHF 1.21557 | USDCHF 0.89306 | GBPUSD 1.71311 | EURGBP 0.79455 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.65 | 101.445

EUR/USD             1.36235 | 1.3611

EUR/JPY               138.38 | 138.145

AUD/USD            0.9418 | 0.9391

NZD/USD             0.8799 | 0.8783

USD/CAD             1.0684 | 1.0672

EUR/CHF              1.2159 | 1.21535

USD/CHF             0.89315 | 0.89245

GBP/USD             1.7143 | 1.7127

EUR/GBP             0.79475 | 0.7945

 

For today

  • EUR: Early leveraged buying in Cable helped to move the Euro a little higher in early trading with the market attempting to break out on the topside through 1.3620 however, light offers held the market in check and the market drifted back from the initial moves above the level to the opening 1.3611/12 areas and remaining in a tight range slowly rising again to the 1.3620 as we approached the grey hours. 1.3620-30 still remain the offer area with weak stops through the level and then patchy offers from then on until 1.3670-1.3700 area where the offers stiffen and become more dominant. Downside light bids to the 1.3600 level with the bids getting stronger through that level until around the 1.3570-80 levels and a break through there will open up some better mixture of bids and stops on its way to the 1.3520 levels where stronger bids are suspected.
  • GBP: Fixing demand for the GBP in Tokyo helped the GBP to the highs just above the 1.7140 level however, once the fix was over with the market moved back to trade tightly around the 1.7130 areas. Light offers around the 1.7150 levels then give way to better offers from the 1.7170-1.7200 levels which are now holding the market in play, although we broke through the 1.7100 level yesterday the market still remains bid from that area and into the 1.7080 levels before weak stops and profit taking mix below, with the market now discussing the overall big picture in view of yesterday’s poor numbers the market needs a bigger shake up if it is to move higher.
  • JPY: USDJPY poor performance yesterday seems to be generally ignored by the Asian market as leveraged positions again pick up the slack and move the USDJPY off its lows of 101.45 and back through the opening 101.55 area to push to the 101.65 level deep into the session before beginning to drift slightly into the grey hours. Downside bids remain intact with leveraged buyers from the 101.20 area and short term players willing to buy into any weakness for the day trade. 100.80 remains the key area and a break through the 100.70 level (making new lows for the year) are likely to see some reasonable stops before further bidding enters the market. Topside is heavy towards the 102.00-30 areas and only a push through that area will open up further tests of 102.80.
  • AUD: As the USDJPY rallied so the Oz dipped, moving from the opening to above the 0.9415 levels, at this point the market struggled with topside offers running to the 0.9420 level capping the market before eventually giving up and dropping back through the 94 cent levels, the market has since held in the 0.9395 areas with little interest from sellers to push the market. Topside has offers from here and looks to be a struggle until through the 0.9430 areas where some weak stops make an appearance with offers then coming in every 10-20 pips as leveraged types likely to fade any rally into the 95cent resistance areas. Downside has some light bids from 0.9370 but again very patchy and open to better support from 0.9340.

 

Overnight News

CNY:

China Raises Yuan Reference Rate by 0.1%, Most since June 9

China June Consumer Prices rise 2.3% Y/y; Est. 2.4% Rise

CNY/USD:

Xi Says Conflict Between U.S., China Would Be ‘Disaster’

AUD:

Australia July Consumer Sentiment Rises 1.9% to 94.9

NZD:

RBNZ’s Says Faster Growth in Potential Output Is Desirable

GBP:

U.K. June BRC Shop Price Index -1.8% Y/y vs May -1.4% Y/y

 

Today’s data

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

GBP       BRC Shop Price Index Y/Y Jun A -1.80% | P -1.40%

JPY         Japan Money Stock M2+CD Y/Y Jun A 3.00% | C 3.00% | P 3.30%

AUD       Westpac Consumer Confidence Jul A 1.90% | P 0.20%

CNY        CPI Y/Y Jun A 2.30% | C 2.40% | P 2.50%

CNY        PPI Y/Y Jun A -1.10% | C -1.00% | P -1.40%

06:00     JPY         Machine Tool Orders Y/Y Jun (P) P 24.10%

12:15     CAD       Housing Starts Jun C 190.0K | P 198.3K

14:30     USD       Crude Oil Inventories P -3.2M

18:00     USD       FOMC Minutes

 

Harry Hindsight

  • EUR: Euro’s had a very narrow range through opening around the 1.3605 area and staying within a few pips either side in quiet trading for the Euro. The move into early London did little to enhance the day really although continuing comments about keeping the interest rates lower countered the better than expected German Trade balance. The Euro dropped to its lows for the day and struggled through London holding below the opening and unable to push through the 1.3590 levels, with decent option expiry’s the market remained around the 1.3600 level moving in NYK to above the 1.3610 levels and touching in the mid-teens before a quiet close.
  • GBP: Saved by the bell as it were, the market moved quietly higher in the Asian session moving from the opening 1.7130 levels to trade above the 1.7145 into early Tokyo with leveraged types seen buying GBPJPY in light profit taking. The market began to slip back once the light buying died out and the market slipped into the grey hours just below the opening. With early London awaiting the numbers to be released the market edged back higher and then the release, and for the first time in several months a big disappointment with only the NIESR GDP figure coming in unchanged, the rest were largely down, so whether the strong GBP is to blame or the recovery is running out of steam after a strong expansion remains to be seen but the weakness was broad based and one would suspect that weakness in Europe may have stronger implications for the UK. The market acted as expected with a sudden drop lower pushing quickly through the 1.7100 support area but quickly running out of steam as the sellers met profit taking through the level and stalled just above the 1.7085 level. While there was little in the way of USD data or news the market started to rally back slowly over the course of the session and one can only assume that EURGBP selling kicked in a stubborn Euro market reversing the losses in GBP as it clawed its way back to the 1.7120 level. The market held this level into the NYK option cut before rallying a little further and holding steady around the opening levels into the close.
  • JPY: The USDJPY drifted lower having only slightly improved on the opening 101.88 area. Dipping a little more strongly into early Tokyo and moving to below the 101.70 levels the market recovered into the later part of the session towards the opening levels. Having recovered the market moved into the grey hours holding around the 101.85 levels and then the London opening started a steady push lower. NYK entered the market with no data or relevant news leaving the USD broadly weaker against the market.  USDJPY dropped back through the supportive areas to test the 101.50 having triggered weak stops through the 101.70 levels before holding the 101.50 level and a long dull end to the day around the 101.55 areas.
  • AUD: With the general weakness in the USDJPY the Oz found room again to move higher, opening around the 0.9370 it dipped only slightly lower before starting a steady rise throughout the day, the move from the NAB Business number led the way pushing quickly higher to above the 0.9395 level triggering some minor stops along the way. The market was held in check from mid-way through Tokyo and once the London market started to move in the Oz again moved higher briefly stepping through 94 cents but struggling against the offers, eventually into NYK the market again pushed higher breaking the 0.9410 levels before drifting back to the 94 cent area and a quiet closing period around that level.

Yesterday’s premiership results

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

JPY         Current Account (JPY) May A 0.38T | C 0.17T | P 0.13T

AUD       NAB Business Confidence Jun A 8 | P 7

EUR        German Trade Balance (EUR) May A 18.8B | C 16.2B | P 17.4B | R 17.2B

CHF        CPI M/M Jun A -0.10% | C 0.10% | P 0.30%

CHF        CPI Y/Y Jun A 0.00% | C 0.20% | P 0.20%

CHF        Retail Sales (Real) Y/Y May A -0.60% | C 1.50% | P 0.40% | R 0.80%

GBP       Industrial Production M/M May A -0.70% | C 0.30% | P 0.40%

GBP       Industrial Production Y/Y May A 2.30% | C 3.20% | P 3.00% | R 2.90%

GBP       Manufacturing Production M/M May A -1.30% | C 0.40% | P 0.40%

GBP       Manufacturing Production Y/Y May A 3.70% | C 5.60% | P 4.40%

GBP       NIESR GDP Estimate Jun A 0.90% | P 0.90%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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