Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.685 | EURUSD 1.35689 | EURJPY 137.977 | AUDUSD 0.93702 | NZDUSD 0.87666 | USDCAD 1.07585 | EURCHF 1.21542 | USDCHF 0.8957 | GBPUSD 1.71436 | EURGBP 0.79154 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.77 | 101.66

EUR/USD             1.3572 | 1.3560

EUR/JPY               138.085 | 137.95

AUD/USD            0.9374 | 0.9332

NZD/USD             0.8770 | 0.8695

USD/CAD             1.0766 | 1.0753

EUR/CHF              1.21565 | 1.21535

USD/CHF             0.8963 | 0.8957

GBP/USD             1.7145 | 1.7133

EUR/GBP             0.7918 | 0.7914

 

For today

  • EUR: Another heady day in the busy financial markets known as Foreign exchange, or so it seems with volumes only slightly elevated from the past two days in Asia the market in the Euro’s has slowly drifted lower and away from the opening 1.3570 level, the downside is a little more open than we’ve seen over the past week with a congested area around the 1.3550 levels less likely to hold the market than the 1.3520 areas that have held over  the past two months, with that in mind the 1.3520-00 level is still likely to have good bids either from shorts profit taking or those that have natural flow to do at that level. A solid break below the 1.3490 level will likely see stops triggered from weak stops and longer term breakout players with the market opening up over the next big figure to 1.3400 with only suspected patchy bids. Topside has offers starting above the 1.3570 level only light but likely to see some stiffer offers as you approach 1.3600 a surprise lift in the Eurozone Trade balance could have a decent move attached to the topside however, the consensus is already fairly strong for the May number. Through the 1.3600 levels the market again opens up with weak stops likely through the 1.3620 areas and little in the way of selling until deeper into the 1.36 levels.
  • GBP: Cable has slowly eased back from the opening above the 1.7145 levels to trade only 10 pips lower on the light cross selling through the session. With the topside still with resistance into the 1.7200 levels that remains the focal point for the moment and whether we will have enough momentum on a further attempt, with the media speculating on a rate rise that just happens to coincide with what the market was told 18 months ago, the market is likely to see possibly a choppy session as the market rebalances after yesterday’s rise. A push through the 1.7200 levels leaves very little to stop a firmer move to the 1.7500 over the coming weeks however, it’s getting through the next level and even then the market will then be talking about a strong GBP affecting the GDP levels in the coming months (who wants to be an MPC member). Downside is weak for the most part as we’ve moved around the 1.7050/1.7150 level for the best part of the month so only a push through the 1.7050 level will see any real interest materialising one suspects with shorts likely to enter the market for a break lower and into the 1.6950 support area.
  • JPY: USDJPY has risen slowly but steadily from the 101.68 levels to push above 101.76 in quiet trading with the bulk of the move in the Tokyo fix for the weekend (last spot day for the week), the market has remained up against the offers since then and moves into the grey hours around the 101.75 level. A push through the 101.80 level should see the market make a gradual attempt to the 102.00 levels with a light mixture to the level, then it becomes a little more difficult with offers likely to dominate the market to the 102.30 levels. Downside is fairly open with leveraged accounts and real money types willing to buy into any weakness down to the low 101’s with better support from the 101.30 areas onwards.
  • AUD: The dovish tones and the weakness through the London session set the tone for the Asian session. Opening around the 0.9370 level the market dropped slowly to the lows of yesterday before the Chinese data hit the market and while on the face of it a good set of numbers the market managed a brief rally back to the opening levels before dropping off and to the 0.9340 levels and drifting towards the supportive 0.9320 areas. Topside sees leveraged and real money traders willing to fade the market on any moves towards the 0.9370 levels and offers are building towards the 94 cent level, the downside bids are still in play with the market currently on the monthly support line and a push below the 0.9320 levels likely to see a deeper move back into the 92 cent handle.

Overnight News

BRICS:

The five countries in BRICS have not discussed forex action, but believe it is a good idea official

CNY:

Chinese oil rig finds signs of oil and gas in the disputed Paracel Islands

GDP rises against expectations to 7.50%

NZD:

Overall yearly CPI rises to 1.60%

 

Today’s data

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

NZD       CPI Q/Q Q2 A 0.30% | C 0.40% | P 0.30%

NZD       CPI Y/Y Q2 A 1.60% | P 1.50%

AUD       Westpac Leading Index M/M Jun A 0.10% | P 0.10%

CNY        GDP YTD Y/Y Q2 A 7.50% | C 7.40% | P 7.40%

CNY        Fixed Assets Ex Rural YTD Y/Y Jun A 17.30% | C 17.20% | P 17.20%

CNY        Retail Sales Y/Y Jun A 12.40% | C 12.50% | P 12.50%

CNY        Industrial Production Y/Y Jun A 9.20% | C 9.00% | P 8.80%

08:30     GBP       Jobless Claims Change Jun C -27.1K | P -27.4K

08:30     GBP       Claimant Count Rate Jun P 3.20%

08:30     GBP       ILO Unemployment Rate (3M) May C 6.50% | P 6.60%

09:00     EUR        Eurozone Trade Balance (EUR) May C 16.3B | P 15.8B

09:00     CHF        ZEW (Expectations) Jul P 4.8

12:30     CAD       Manufacturing Shipments M/M May C 1.30% | P -0.10%

12:30     USD       PPI M/M Jun C 0.20% | P -0.20%

12:30     USD       PPI Y/Y Jun C 1.80% | P 2.00%

12:30     USD       PPI Core M/M Jun C 0.20% | P -0.10%

12:30     USD       PPI Core Y/Y Jun C 1.60% | P 2.00%

13:00     USD       Net Long-term TIC Flows May C 27.4B | P -$24.2B

13:15     USD       Industrial Production Jun C 0.30% | P 0.60%

14:00     CAD       BoC Rate Decision C 1.00% | P 1.00%

14:00     USD       NAHB Housing Market Index Jul C 50 | P 49

14:30     USD       Crude Oil Inventories P -2.4M

18:00     USD       Fed’s Beige Book

 

Harry Hindsight

  • EUR: The Asian session saw limited movement opening around the 1.3620 level and peaking just through the 1.3625 level before drifting off to the 1.3615 level and slowly into the London session. The grey hours saw light selling to the 1.3605 level before the market reversed on the opening pushing back above the highs for the day. The release of the UK data set the cat amongst the pigeons causing the Euro to drop back as strong EURGBP selling entered the market. Euro’s bounced off the 1.3590 level as the EURGBP hit bids and held after the release of its own figures showing a slight weakening in the ZEW measurements. Having recovered its early losses the market moved into the NYK session with a mixture of data with Empire state manufacturing numbers showing a good increase and triggering a USD rally across most of the pairs and again the Euro was set on its heels and dropped through the weakened support and moving to the 1.3570 level, touching below the 1.3565 levels the market held that level into the close with a quiet ending to the day.
  • GBP: Cable opened around the 1.7085 levels in Asia and slowly moved away from the highs of 1.7090 through the session, light selling into the grey hours sent the market down to 1.7060 levels. The lead into the numbers saw some light profit taking entering the market and turning the market as the numbers were released. The market rose quickly on the CPI number which came in 0.30% above expectations to reverse the previous months drop, the market moved in a straight line to the 1.7140 levels stalling for a reasonable period as the market eroded the offers in the area and then a steady climb into the NYK session and to the 1.7170 levels. As Yellen gave her semi-annual testimony the USD started to rally this in turn triggered further selling in EURGBP and the Cable was again squeezed through the 1.7170 level firmly to trigger weak stops to the 1.7190 level and set the highs before following the rest of the currencies as USD moved steadily higher. Having made new 6yr highs the market made its way back to the break out point of 1.7140 and rested above the level into a far quieter close.
  • JPY: USDJPY opened around the 101.54 and although the market has generally trended higher over the course of the day the market made the range in the period around the Yellen testimony setting a range of 101.44-75 in a short period in the NYK session having been reasonably unaffected by the movements in EUR and GBP through the London session, having moved off those lows and hit the highs it settled back a little having run into light offers to hold just below the lows in a reasonably quiet session for the pair, obviously with the fall back of the Euro the EURJPY remained untouched and the cross dropped back to sub 138.00.
  • AUD: The Oz opened quietly around the 0.9390-95 area and traded that way for a good proportion of the Asian session, the RBA minutes which were likely to upset the apple cart seemed to pass by with a whisper with none of the Rhetoric heard over the weekend and although slightly dovish was nowhere near the expected. Trading to just above the 94 cent level at one stage the market settled to trade around the 0.9395 levels as reasonable demand for the AUDJPY carry remained in the market over a quiet session. The grey hours saw early sellers of the AUD with EURAUD buying featuring if somewhat briefly before the Oz dropped off to the 0.9365 level as leveraged traders woke to the minutes in Europe. London opened with little to do in the Oz and the movement seemed to be over, trading to just below the 0.9360 levels into mid-session the market was largely unaffected by the GBP and Euro movements and only the Yellen testimony stirred the market moving it quickly towards the 94 cent level before dropping in back again to the 0.9350 level and light support. The market rebounded off the lows a little and struggled to trade around the 0.9370 levels for the balance of the session.

Yesterday’s premiership results

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

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

CHF        Producer & Import Prices M/M Jun A 0.00% | C 0.10% | P 0.10%

CHF        Producer & Import Prices Y/Y Jun A -0.80% | C -0.80% | P -0.80%

GBP       CPI M/M Jun A 0.20% | C -0.10% | P -0.10%

GBP       CPI Y/Y Jun A 1.90% | C 1.60% | P 1.50%

GBP       Core CPI Y/Y Jun A 2.00% | C 1.70% | P 1.60%

GBP       RPI M/M Jun A 0.20% | C -0.10% | P 0.10%

GBP       RPI Y/Y Jun A 2.60% | C 2.40% | P 2.40%

GBP       PPI Input M/M Jun A -0.80% C 0.00% | P -0.90% | R 0.30%

GBP       PPI Input Y/Y Jun A -4.40% | C -4.50% | P -5.00% | R -3.80%

GBP       PPI Output M/M Jun A -0.20% | C 0.10% | P -0.10%

GBP       PPI Output Y/Y Jun A 0.20% | C 0.50% | P 0.50%

GBP       PPI Output Core M/M Jun A 0.00% | C 0.00% | P 0.00%

GBP       PPI Output Core Y/Y Jun A 1.00% | C 1.00% | P 1.00%

GBP       DCLG UK House Prices Y/Y May A 10.50% | C 10.20% | P 9.90%

EUR        German ZEW (Economic Sentiment) Jul A 27.1 | C 30 | P 29.8

EUR        German ZEW (Current Situation) Jul A 61.8 | C 67.5 | P 67.7

EUR        Eurozone ZEW (Economic Sentiment) Jul A 61.8 | C 62.3 | P 58.4

USD       Advance Retail Sales Jun A 0.20% | C 0.60% | P 0.30% | R 0.50%

USD       Retail Sales Less Autos Jun A 0.40% | C 0.60% | P 0.10% | R 0.40%

USD       Empire State Manufacturing Jul A 25.6 | C 17.2 | P 19.3

USD       Import Price Index M/M Jun A 0.10% | C 0.30% | P 0.10% | R 0.30%

USD       Business Inventories May A 0.50% | C 0.60% | P 0.60%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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