Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 101.64 | EURUSD 1.36417 | EURJPY 138.658 | AUDUSD 0.94135 | NZDUSD 0.88274 | USDCAD 1.06509 | EURCHF 1.21541 | USDCHF 0.89095 | GBPUSD 1.71579 | EURGBP 0.79508 |

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.66 | 101.50

EUR/USD             1.36495 | 1.3639

EUR/JPY               138.66 | 138.51

AUD/USD            0.9459 | 0.9396

NZD/USD             0.8839 | 0.8815

USD/CAD             1.0657 | 1.0647

EUR/CHF              1.2156 | 1.2153

USD/CHF             0.8912 | 0.8904

GBP/USD             1.7168 | 1.7151

EUR/GBP             0.79565 | 0.79495

For today

• EUR: The Euro remains quiet through the Asian session moving up a little from the opening areas of 1.3640, not quiet making the 1.3650 levels through the session and holding 1.3645 for the most part. Movements elsewhere had little impact although the market is now through the 1.3620 areas the market still remains heavy to the topside with offers appear just above the highs and increasing through 1.3670 levels and into 1.3700. Downside has room to the 1.3600 area were light buyers make an appearance with the bids stretching back to the 1.3570 levels, and likely to remain in the area for the moment.
• GBP: Cable struggled through the Asian session making an early move higher and struggling to just below 1.7170 before drifting back towards the 1.7150 levels as we move towards London, topside offers remain above 1.7170 and thicken to the 1.7200 levels however, its Cable and that is likely to swap around on any concerted effort to move higher. Downside is open to just below the 1.7100 levels with bids from the 1.7090 area through the following 20 pips before stops are likely.
• JPY: USDJPY remained fairly quiet slipping back from the opening 101.65 levels to balance on the 101.50 area in slow trading, movements in the USDJPY seemed to be more in line with AUDJPY profit taking on the Oz rally than anything else however, the break up point in EURJPY through 138.50 seems to have attracted bids in the legs protecting that level for the moment, and while it’s working in Asia is less of a certainty in London. Topside offers above the 101.80 level thickening to 102.30 remain in play with light stops through the topside and opening larger offers around 102.70 and onwards, downside remains the same bids light from here getting larger on a move through 101.30 and likely to be protected down through the 101.00 level and into the 100.70 areas.
• AUD: Employment and unemployment numbers dominated the market and the market slowly moved higher in to Tokyo and as the market adjusted before the numbers. The market had made its way from the opening 0.9430 levels and held in the region, once the numbers were released, a better than expected rise in employment sent the market quickly to the 0.9455 triggering some reasonable stops through the level before the market absorbed the second number with unemployment rising for the month above expectations and turning the market on its head and driving back to the 94 cent level and sufficient interest to hold the market steady from then until into the grey hours. Offers above the 0.9450 level, with several patches of offers on the way to the 95 cent level, this is likely to be stronger on the offer side. Downside has only light bids supporting the market and the market remains open for a deeper sell off if the right combination turns up with better bids on the 0.9320 area.

Overnight News

CNY:

China Sets Yuan Reference Rate at Strongest Since March 26

China Exports in June up 7.2%; Market Expected 10%

China Trade Still Faces ‘Complex’ and ‘Severe’ Situation: Zheng

China Customs Official Says Exporters Want Stable Yuan Rate

CNY/USD:

Yellen Comments Consistent With FOMC Statement: PBOC Governor

PBOC to Cut FX Intervention ‘Noticeably’ When Conditions Ready

AUD:

Australia’s Unemployment Rate Rises

JPY:

GPIF Will Limit Market Impact When Cutting Bonds, Yonezawa Says

Japan May core machinery orders record fall casts shadow over economy

BOJ Said to View JPX-Nikkei 400 as Future Option for ETF Buys

Japanese Sold Net 287.1 Billion Yen Overseas Debt Last Week

Amari Says Japan Nominal GDP Key Factor for 10% Sales Tax: Asahi

USD:

Fed’s Bullard Says Unemployment Drop to Push Inflation Above 2%

GBP:

U.K. June RICS House Price Index at 53 vs Est. 55

NZD:

New Zealand June Manufacturing Expands as New Orders Decline

 

Today’s data

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

NZD       Business NZ Manufacturing Index Jun A 53.3 | P 52.7

GBP       RICS House Price Balance Jun A 53% | C 55% | P 57% | R 56%

JPY         Domestic CGPI M/M Jun A 0.20% | C 0.10% | P 0.30%

JPY         Tertiary Industry Index M/M May A 0.90% | C 1.70% | P -5.40% | -5.70%

JPY         Machine Orders M/M May A -19.50% | C 0.70% | P -9.10%

CNY        Trade Balance Jun A $31.6B | C $36.95B | P $35.92B

AUD       Employment Change Jun A 15.9K | C 12.0K | P -4.8K

AUD       Unemployment Rate Jun A 6.00% | C 5.90% | P 5.80%

JPY         Consumer Confidence Index Jun  A 41.1 | C 40.3 | P 39.3

08:00     EUR        ECB Monthly Bulletin

08:30     GBP       Visible Trade Balance (GBP) May C -9.0B | P -8.9B

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

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

12:30     CAD       New Housing Price Index M/M May C 0.20% | P 0.20%

12:30     USD       Initial Jobless Claims (JUL 5) C 316K | P 315K

14:00     USD       Wholesale Inventories May C 0.60% | P 1.10%

Harry Hindsight

• EUR: The market opened in Asia above the 1.3610 area, moving into Tokyo there was a quick concerted effort to push the Euro higher only to fail just above the 1.3620 level and a slow slide back to the opening levels. The move into the grey hours saw the market again attempting the topside touching through the 1.3630 level before again slipping back with comments from ECB members and others for either side of the argument of easing and no concerns about the current levels of the Euro, obviously easing and strength of the Euro’s has been bandied around for months the flip side has not which led to the move topside. The failure to the topside left the market vulnerable however, without decent data for the day the market lacked the impetus to do that much damage and the market held around the 1.3605 levels moving into the NYK opening, a rehash of earlier comments again had the market running higher and nervousness over the FOMC minutes led to another sharp rally as shorts took back some of their positioning, weak stops were triggered through the 1.3630 level and the market this time stalled just above the 1.3640 levels before drifting lower again into the FOMC minutes. The market dropped initially as USD rallied to the early comments before the market turned sharply and moved back to the highs and through 1.3645 levels and another set of offers.
• GBP: Holding the 1.7130 opening levels the market rose slightly into the early Tokyo session with cross Yen buying driving the GBP higher to above the 1.7140 levels before slipping back and dipping below the opening. Grey hour buying again took the market higher to above the 1.7145 areas before the market saw some concerted weakness dipping slowly through the 1.7100 and halting as with the previous day around the 1.7095 levels. As with the Euro the Cable market pushed back to the opening area on the release of the minutes in the US, the market pushed quickly to touch above the 1.7160 level before holding steady around the 1.7155 levels into the close. The EURGBP made slow gains on the day as the GBP failed to keep pace with the Euro rise however, overall the market was lacking in volume and volatility as normal. The FOMC minutes were not that illuminating really in that we already know all of it has been discussed before.
• JPY: A minor dip on the opening and into the Tokyo session saw the market moving off from the 101.45 levels gradually moving through to the 101.65 levels and into the grey hours, London opening saw the same movement and the market moved into the FOMC above the 101.75 on the steady buying. The release saw a sharp rise to above the 101.85 levels before the market collapsed back to 101.55. The market finished the day around the 101.65 level once the dust had settled.
• AUD: The market remained fairly flat in the Oz having opened around the 0.9400 levels and although we attempted a few times to break higher the market struggled to push through the 0.9415 during Asia and slipped back to trade below the 94 cent levels, the market maintained those levels through the best part of the day before running into the FOMC minutes, moving initially lower to 0.9385 areas before rallying quickly to break above the earlier highs pushing to 0.9425 before stalling in the face of the offers. The market then drifted a little into the close and held in the 0.9410 areas.

Yesterday’s premiership results

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%

JPY         Machine Tool Orders Y/Y Jun (P) A 34.20% | P 24.10%

CAD       Housing Starts Jun A 198K | C 190.0K | P 198.3K

USD       Crude Oil Inventories A -2.4M | C -1.7M | P -3.2M

Good Luck,

Andy