Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.682 | EURUSD 1.35256 | EURJPY 137.522 | AUDUSD 0.93684 | NZDUSD 0.87073 | USDCAD 1.07419 | EURCHF 1.21508 | USDCHF 0.89837 | GBPUSD 1.71368 | EURGBP 0.78926 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.70 | 101.46

EUR/USD             1.3534 | 1.3523

EUR/JPY               137.53 | 137.25

AUD/USD            0.9371 | 0.9353

NZD/USD             0.8719 | 0.8683

USD/CAD             1.0751 | 1.0734

EUR/CHF              1.2151 | 1.2145

USD/CHF             0.89845 | 0.8977

GBP/USD             1.7142 | 1.7134

EUR/GBP             0.78965 | 0.7891

 

For today

  • EUR: Euro’s stayed in a narrow range for the bulk of the Asian session before dropping away to test the support areas into the grey hours, opening just above the 1.3520 area the market moved steadily to the low 1.3530’s before slipping back. With the immediate support around the 1.3520/00 levels a push through is likely to find a mix of bids and light stops, it’s likely that stronger stops will not be seen until a break through the 1.3480 level thus confirming a move through the years lows with light bids appearing from the 1.3420/50 area as profit taking moves in. Light offers around 1.3540-50 levels is followed with better offers towards the 1.3570 area and into 1.3600.
  • GBP: A very quiet day for the Cable with no data due to day of consequence the market has held the 1.7140 areas for the most part making a minor dip below 1.7135 before moving back to the start point. Offers appear light through the 1.7150 areas as leveraged players look at the market to go short again; this if it happens would leave weak stops likely above the 1.7210 areas and behind the strong offers from 1.7190 onwards. Downside bids are really light around the 1.7110 level and downwards with no real stops likely to be nearby until a move through the 1.7050 areas however, there are likely to be a fair few profit taking bids along the way and with no data I’d watch the Euro for direction.
  • JPY: With little news apart from deepening sanctions the market has seen a steady flow of safe haven movement sending the pair from the opening 101.70 areas down to finish the day around the 101.50 levels into London. With model and leverage selling pushing the market lower in the face of retail buying the pair while tight in range has been reasonably heavy in volume and the movement does not reflect this. Light bids 101.40 increasing in size the closer you get to the 101.00 level and then the all-important years lows below. On the top offers remain from the 101.80 level back and increasing in size through to the 102.30 levels, from there the market opens up a little with likely decent stops entering the market however, given the volumes against the movement so far it could be a slow day unless something surprising occurs in the USD figures.
  • AUD: After some strong selling in the Tokyo session the market was unable to move past the 0.9350 level and held above for a good proportion of the day before moving quickly back to the opening levels as the market moved towards the grey hours. Cross buying in the AUDNZD continued through the session with the NZD confidence index rising to 132.7 with the current condition slightly worse than last month, AUDJPY selling was no help and although for the most part the USDJPY leg took the pressure it did have limited impact. One piece of news out of China was the failure of a building company with large debts which initially sparked the move lower. For the moment 0.9330 and down to the 93 cent level has support however, through there the market becomes a little patchy with light mixes only, topside has offers from the 0.9390 level and through to the 0.9420-30 area getting stronger as you move to the high end with likely good stops through those levels.

Overnight News

EUR/USD/RUB:

Europe joined the US in aiming more sanctions at Russia over the Ukraine standoff

Russian Deputy Foreign minister Ryabkov states the sanctions are unacceptable and Russia may retaliate.

US hits oil giant Rosneft, and others with toughest sanctions so far

AUD:

Australian businesses stay upbeat on outlook, plan to raise spending survey

Australian PM Abbott says falling short on G20 growth targets

NZD:

Consumer confidence nudges higher in July survey

IMF:

Congratulates BRICS for new fund and offers help

GBP:

Most UK company bosses plan to at least match inflation with pay survey

CNY:

CEO probe puts China firm at risk of landmark bond default

China’s mini-stimulus efforts are unlikely to lift steel prices CISA

Chinese oil rig moved away from disputed waters off Vietnam

China seeks to build railways in Brazil to ship out commodities

JPY:

Japan manufacturers mood points to moderate economic recovery

EUR:

EU leaders fail to agree on top jobs, decision put off until the end of August

 

 

 

 

 

 

Today’s data

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

AUD       Conference Board Leading Index May A 0.20% | P -0.10% | R -0.20%

AUD       NAB Business Confidence Q2 A 6 | P 6 | R 7

09:00     EUR        Eurozone CPI M/M Jun C 1% | P -0.10%

09:00     EUR        Eurozone CPI Y/Y Jun (F) C 0.50% | P 0.50%

09:00     EUR        Eurozone CPI – Core Y/Y Jun (F) P 0.80%

12:30     CAD       International Securities Transactions (CAD) May P 10.13B

12:30     USD       Initial Jobless Claims (JUL 12) C 310K | P 304K

12:30     USD       Building Permits Jun C 1.04M | P 0.99M

12:30     USD       Housing Starts Jun C 1.02M | P 1.00M

14:00     USD       Philly Fed Survey Jul C 15 | P 17.8

 

Harry Hindsight

  • EUR: The focus again was more on GBP and the USD as very little data was due, the market in Asia opened around the 1.3570 levels and was sliding lower throughout the day with only a limited moving into the grey hours dipping below the 1.3560. The move into London saw the momentum increase a little with a weaker than expected Eurozone trade balance adding to which the movements in EURGBP kept the Euro from reversing. The market slowed its decline as it moved closer to the support area around the 1.3520 levels and although the market continued selling the Euro was unable to move any lower and held in the low 1.3520’s once London had left for the day and only rising to the 1.3530 into the close. While the market was quiet short the movement down was slowed by a steady stream of profit taking from the leveraged accounts.
  • GBP: As with the Euro through the Asian session moving steadily lower from the opening 1.7140 areas and into the grey hours just above the 1.7130 levels, the release of the jobless numbers initially sent the market higher however, the fact that wage rises are still holding around the 0.7% area allows some room for the MPC as a leading indicator to future retail inflation numbers, this sent the market back to the 1.7115 levels from above 1.7150 and the market then spent the session regaining its losses to finish the day almost unchanged. All in all a disappointing day with neither a firm conviction to test the 1.7200 level it came close too or reverse the gains made.
  • JPY: USDJPY maintained a fairly narrow range opening around the 101.68 levels and moving higher on light fixing demand to test above the 101.75 areas, once the market moved into the grey hours EURJPY selling from around the 138.00 level dominated the JPY and USDJPY dipped to the 101.65 levels for the first time. London opening saw straight USDJPY buying from the lows with expectations that leveraged and real money buying was likely to continue only to touch just below the 101.80 levels, the move into the NYK session couldn’t push the market any higher and the pair started to lose ground again and a couple hours into the NYK session again touched through the 101.65 levels. With the London close came a gradual move higher only to start to dip again into the close.
  • AUD: The market opened around the 0.9370 levels and was quickly sold as the market moved into Tokyo with a flat leading index and the risk averse covering longs. The move down was only to the 0.9360 level however, once the China numbers were  released the market dropped quickly on what was a reasonable set of numbers with GDP up slightly, the market spiked higher to above the opening levels before dropping down to the 0.9340 level in what felt like an already planned move by the market to which nothing was going to go against the dovish attitude of the RBA at the moment. The move into London started to see the losses reversed with the market moving off the eventual 0.9330 lows and the supportive area moving back above the 0.9350 levels and trading quietly through into the NYK session. With a mixed reaction to the USD numbers the market steadily pushed back to recapture most of the lost ground before finishing quietly off the support and only just short of the 0.9370 levels we started with.

 

Yesterday’s premiership results

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%

GBP       Jobless Claims Change Jun A -36.3K | C -27.1K | P -27.4K

GBP       Claimant Count Rate Jun A 3.10% | P 3.20%

GBP       ILO Unemployment Rate (3M) May A 6.50% | C 6.50% | P 6.60%

EUR        Eurozone Trade Balance (EUR) May A 15.3B | C 16.3B | P 15.8B | R 15.2B

CHF        ZEW (Expectations) Jul A 0.1 | P 4.8

CAD       Manufacturing Shipments M/M May A 1.60% | C 1.30% | P -0.10% | R -0.20%

USD       PPI M/M Jun A 0.40% | C 0.20% | P -0.20%

USD       PPI Y/Y Jun A 1.90% | C 1.80% | P 2.00%

USD       PPI Core M/M Jun A 0.20% | C 0.20% | P -0.10%

USD       PPI Core Y/Y Jun A 1.80% | C 1.60% | P 2.00%

USD       Net Long-term TIC Flows May A 19.4B | C 27.4B | P -$24.2B | R -41.2B

USD       Industrial Production Jun A 0.20% | C 0.30% | P 0.60%

CAD       BoC Rate Decision A 1.00% | C 1.00% | P 1.00%

USD       NAHB Housing Market Index Jul A 53 | C 50 | P 49

USD       Crude Oil Inventories A -7.5M | C -2.1M | P -2.4M

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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