Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.537 | EURUSD 1.36189 | EURJPY 138.284 | AUDUSD 0.93926 | NZDUSD 0.88012 | USDCAD 1.07116 | EURCHF 1.21466 | USDCHF 0.89187 | GBPUSD 1.70835 | EURGBP 0.79716 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.65 | 101.53

EUR/USD             1.3627 | 1.3613

EUR/JPY               138.43 | 138.31

AUD/USD            0.9402 | 0.9384

NZD/USD             0.8817 | 0.8803

USD/CAD             1.0726 | 1.0711

EUR/CHF              1.21485 | 1.21465

USD/CHF             0.8924 | 0.89155

GBP/USD             1.7091 | 1.7078

EUR/GBP             0.79755 | 0.7970

 

For today

  • EUR:  While the range and volumes are little changed from yesterday. Moving from the opening 1.3620 area to trade above the 25 level into the middle of the session the market was again broadly driven to the highs by early EURJPY buying from the fixing onwards in Tokyo. Once the drive higher in EURJPY had traded into offers around the 138.50 level the Euro was forced lower as the USDJPY maintained its attempts to move higher. The Euro dropped back to set the lows just below the 1.3615 level and has maintained a tight range since. Topside offers from the 1.3640 level with suspected weak stops through 1.3650 before stronger offers start to appear the closer you get to the 1.3700 levels. Downside still remains supported from the 1.3600 level and into the 1.3570 area before giving way to a mixture of stops and bids from shorts. Through those levels the bids start to increase as you move towards the 1.3520 areas where support has been particularly strong over the past few months with nothing likely to change.
  • GBP: Cable traded sideways with little interest in the pair once, rising from the opening 1.7085 opening the market was unable to push through the 1.7090 levels into the Tokyo session and drifted for most of the session. The market held around the 1.7080 levels late into the session and has maintained that area into the grey hours. Downside 1.7050 is the point where the market broke on its way up at the end of June so is likely to attract some light bids and key to a deeper move lower with better bids probably to be found sub 1.70 to the previous 1.6950 level. Topside has light offers around the 1.7100 level now with weak stops above 1.7120 before similar offers we’ve seen over the past 3 weeks around the 1.7150 levels and stronger the closer you get to 1.7200.
  • JPY: USDJPY again struggled with more import to the EURJPY offers around the 138.50 level than anything in USDJPY, of course the BoJ monetary policy statement retains the planned for 60-70T annual rise in the base otherwise everything was in line with previously. USDJPY found some buying either through the aforementioned EURJPY attempts higher or fixing demand which was light when it entered the market and the USDJPY has been unable to move beyond the 101.65 levels and remains stuck for the moment around 101.60. Light offers from the 101.70 level and into the 102.00 areas with very little in the way of stops however, the 138.50 level may hold interest with a break there for the second time possibly attracting interest. Through 102.30 sees better congregation of stops but as with this level likely to run into real money offers. Downside is weak until 101.20 areas, as with previously the bids are thick and run deep in the market with the usual leveraged amounts sitting in front of sentimental levels and technical levels to the years lows.
  • AUD: Whether the market expected anything from the RBA minutes remains to be seen,  I for one did expect a more dovish tone, given the speech that was made over the weekend however, that could have been my own interpretation. The market held around the 0.9390-9400 throughout the session with dips through to 0.9385 as the commentary was released but for the most part the knee jerk reaction did very little damage in a quiet market. Offers to the topside still dominate that direction with likely stops not appearing until a break of the 0.9440 levels and offers all the way to that level, a push through there only opens up further selling from the 0.9460 levels and into the 95cent level which we’ve already seen this month and is not likely to hold to many surprises. A move back through 0.9380 level is not likely to opening much either with a better test of 0.9340 the only real level to watch.

Overnight News

GBP:

UK needs to invest in trade to rebalance economy, BCC says

UK retail sales growth slows sharply in June BRC

EUR:

Hollande hits at tax cuts for middle class, urges French to be positive

EUR/IMF:

IMF warns ECB of credibility at risk over deflation paralysis

EUR/USD:

German minister says EU-US trade talks must be more open-paper

WTO:

WTO Faults US over duties on Chinese, Indian steel goods.

AUD:

Australian financial inquiry warns on housing boom

 

 

Today’s data

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

GBP       BRC Sales Monitor Y/Y Jun A -0.80% | P 0.50%

07:15     CHF        Producer & Import Prices M/M Jun C 0.10% | P 0.10%

07:15     CHF        Producer & Import Prices Y/Y Jun C -0.80% | P -0.80%

08:30     GBP       CPI M/M Jun C -0.10% | P -0.10%

08:30     GBP       CPI Y/Y Jun C 1.60% | P 1.50%

08:30     GBP       Core CPI Y/Y Jun C 1.70% | P 1.60%

08:30     GBP       RPI M/M Jun C -0.10% | P 0.10%

08:30     GBP       RPI Y/Y Jun C 2.40% | P 2.40%

08:30     GBP       PPI Input M/M Jun C 0.00% | P -0.90%

08:30     GBP       PPI Input Y/Y Jun C -4.50% | P -5.00%

08:30     GBP       PPI Output M/M Jun C 0.10% | P -0.10%

08:30     GBP       PPI Output Y/Y Jun P 0.50%

08:30     GBP       PPI Output Core M/M Jun C 0.00% | P 0.00%

08:30     GBP       PPI Output Core Y/Y Jun C 1.00% | P 1.00%

08:30     GBP       DCLG UK House Prices Y/Y May C 10.20% | P 9.90%

09:00     EUR        German ZEW (Economic Sentiment) Jul C 30 | P 29.8

09:00     EUR        German ZEW (Current Situation) Jul C 67.5 | P 67.7

09:00     EUR        Eurozone ZEW (Economic Sentiment) Jul C 62.3 | P 58.4

12:30     USD       Advance Retail Sales Jun C 0.60% | P 0.30%

12:30     USD       Retail Sales Less Autos Jun C 0.60% | P 0.10%

12:30     USD       Empire State Manufacturing Jul C 17.2 | P 19.3

12:30     USD       Import Price Index M/M Jun C 0.30% | P 0.10%

14:00     USD       Business Inventories May C 0.60% | P 0.60%

 

Harry Hindsight

  • EUR:  The speeding up of reforms for Banco Espirito Santo in Portugal helped to relieve a dull session, Asia moved around the 1.3600-05 levels for much of the period with the whole market on hold. The opening in London saw the announcement of reforms to be taken and the market quickly moved to the 1.3640 level before running into offers and while the immediate ramifications seem to have been dealt with the question still remains of is this an isolated case. Having hit the highs shortly after the London opening a significant drop in the IP numbers for the Eurozone pushed the market to mid-range and the market meandered into the NYK session around the 1.3625 levels before dipping a little lower once the London market closed. The market continued to drift as USD became more dominant in late trading and the market settled around the 1.3620 areas. There was lots of rhetoric from Draghi in the testimony to the ECB in the late session with nothing we hadn’t heard before at some stage over the past few months apart from the pats on the back for taking transparency to a whole new level, for Europe that is, maybe releasing auditor notes is the next cat out of the bag.
  • GBP: A slow Asian session improved once London stepped in, dipping into the opening and then catching the rally in the Euro, moving the Cable to just short of the 1.7145 level, while Cable gained the GBP lost ground against the Euro and the cross managed to rally into the NYK session moving off the 0.7945 levels to above 0.7980 into NYK before drifting into the close. Cable at the point of NYK’s opening moved lower as focus shifted more to the EURUSD pairing and Cable found itself close to the 1.7100 levels, the breakthrough was quick and sudden and triggering weak stops before running into some minor support as shorts took advantage of the lows around the 1.7070 levels to cover some of their positions. The remainder of the session was slow and tortuous as the market failed to bounce and was contained within the 1.7070-90 range to the end.
  • JPY: The market opened slightly better than the Friday close and continued a steady rise through the day however, that was a range of around 30 pips only. Moving from the 101.35 level and away from the support areas towards the 101.00 area the market moved into London only just above the 101.40 level. London was quick buyers from the opening taking the market to above the 101.50 level and doubling the range in a far quicker time than the previous 10 pips. Of course it wasn’t the USDJPY that moved and more to do with the EURJPY cross breaking back through the 138.00 level that caused the movement. The EURJPY then settled down unable to take that final move to the 138.50 level and ranged in the 138.30-45 level for the remainder of the session however, as the Euro rally stalled and started to slip back in the NYK session the USDJPY remained focused on moving higher and managed to push through to above the 101.60 in the early NYK session and then spent the balance of the session moving between the 101.55-60 levels into the close.
  • AUD: Strong early buying in AUDJPY and AUDNZD after a weak opening around the 0.9382 level saw the market move back to the 94 cent levels and then do nothing at all in very quiet trading. The whole session remained quiet as the Oz took a back seat to the limited action in Euro’s in particular and with USDJPY only rising gradually the market was less inclined to become involved through the day with RBA minutes for the following session. The market therefore ran out only just short of the 94 cent level with very little to impact either way.

 

Yesterday’s premiership results

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

JPY         Industrial Production M/M May (F) A 0.70% | C 0.50% | P 0.50%

EUR        Eurozone Industrial Production M/M May A -1.10% | C 0.30% | P 0.80%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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