Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY102.121 | EURUSD 1.34087 | EURJPY 136.929 | AUDUSD 0.93834 | NZDUSD 0.84991 | USDCAD 1.08514 | EURCHF 1.21612 | USDCHF 0.90696 | GBPUSD 1.69437 | EURGBP 0.79139 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.14 | 102.03

EUR/USD             1.3416 | 1.3408

EUR/JPY               136.98 | 136.83

AUD/USD            0.9390 | 0.9374

NZD/USD             0.8514 | 0.8498

USD/CAD             1.0857 | 1.0850

EUR/CHF              1.2165 | 1.2161

USD/CHF             0.9070 | 0.9065

GBP/USD             1.6956 | 1.6941

EUR/GBP             0.79145 | 0.7911

 

For today

  • EUR: Another slow day with the market rising from just below the 1.3410 levels to above 1.3415 and back again with the market again stuck on support, with bids from here until through the figure with weak stops likely, some congestion in the upper 1.33’s but breaks through the 1.3380 opens up the 1.3300 levels with a deeper move confirmed to 1.3200. Topside light offers around the 1.3450 levels with those light offers continuing to 1.3500 and better offers.
  • GBP: From the opening 1.6945 the market moved slowly to above the 1.6955 levels before sliding back to the starting point in a limited play for the day. With the 1.6950 levels through one would have expected it to carry on dropping however, the light offers continue down to 1.6900 and the market feels nervous on the moves lower however, with current situations one has to be nervous of an increase in energy prices across Europe if the tensions continue to escalate, and therefore inflation at a period where flowering recovery could be jeopardised. A mixture of light bids and offers then through to the 1.6800 areas.  Offers resting towards the 1.7000 levels with light stops through the 1.7020 areas before a limited mixture over a good portion of the next 1.50 big figures, the moves towards 1.7200 will see offers increasing.
  • JPY: The buying of foreign vehicles continue as the Japanese area continues to look for yield, or so they tell me with the post office pension fund rumoured to have spent some $46.5B this year alone which would give some indication of why the market has struggled to move beyond the 100 levels. However, having said that the market is still struggling to push higher with Abenomics running its course and the market is beginning to wonder if the results are ever going to appear. Topside offers remain in plenty to the 102.30 areas before giving way to lighter offers through the level to 102.50 and then stronger offers again from there. With both 50 and 100DMA broken and 200DMA close the coincidence is lost on the market or so it seems. Downside has bids from the 102.00 level nothing strong or so it would seem moving to the 101.80 levels. Below that level weak stops appear before the market strengthens again as the market moves closer to 101.20 levels.
  • AUD: The market has held in a tight range with little activity as the players sit back waiting for the next piece in the puzzle to which direction the Oz is likely to be pushed either by continuing good figures or verbal intervention at the least to keep a lid on the moves. Holding around the 0.9385 levels the market dipped to below 0.9375 before moving to the opening levels later in the session. Offers appear above the 0.9410 levels and into the 0.9425 areas before light stops are likely, even past that level the market continues to see selling as traders fade a higher move, with the offers strengthening the high it goes and only a strong break above the 95 cent level is likely to reverse the selling. Downside bids are light to the 0.9350 levels strengthening around 0.9320 before a mixture starts to materialise below 0.9280.

Overnight News

EUR:

Bundesbank chief welcomes inflation busting German wage gains

IMF:

Warns of potential risks to global growth as growth slows in EM areas

USD/RUB:

US preparing new Russian sanctions

CNY:

No safe havens in China’s corruption crackdown People’s Daily

JPY:

Japan’s Factory output drops 3.3% on month in June

 

Today’s data

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

NZD       Building Permits M/M Jun A 3.50% | P -4.60% | R -4.40%

JPY         Industrial Production M/M Jun (P) A -3.30% | C -1.00% | P 0.70%

06:00     CHF        UBS Consumption Indicator Jun P 1.77

07:00     CHF        KOF Leading Indicator Jul C 101.1 | P 100.4

09:00     EUR        Eurozone Economic Confidence Jul P 102

09:00     EUR        Eurozone Industrial Confidence Jul C -4.5 | P -4.3

09:00     EUR        Eurozone Consumer Confidence Jul (F) C -8.4 | P -7.5

09:00     EUR        Eurozone Services Confidence Jul C 4.5 | P 4.2

09:00     EUR        Eurozone Business Climate Indicator Jul P 0.22

12:00     EUR        German CPI M/M Jul (P) C 0.20% | P 0.30%

12:00     EUR        German CPI Y/Y Jul (P) C 0.80% | P 1.00%

12:15     USD       ADP Employment Change Jul C 241K | P 281K

12:30     USD       GDP (Annualized) Q2 (A) C 3.10% | P -2.90%

12:30     USD       GDP Price Index Q2 (A) C 1.80% | P 1.30%

12:30     CAD       Industrial Product Price M/M Jun C 0.30% | P -0.50%

12:30     CAD       Raw Materials Price Index M/M Jun C 0.60% | P -0.40%

14:30     USD       Crude Oil Inventories P -4.0M

18:00     USD       FOMC Rate Decision C 0.25% | P 0.25%

 

Harry Hindsight

  • EUR: A slow drift from the opening limited the action in Asia moving from just above the 1.3440 levels down to the 1.3430 level into the grey hours. London reversed the move and steadily moved back to make the highs just below the 1.3445 levels, with no tier 1 data the market moved on the announcements of further sanctions or not depending what you’re selling to Russia. The market dropped back from the highs and moved into the NYK session very little different to the opening. The announcement of the sanctions dropped back through the lows triggering some weak stops along the way and pushing to below the 1.3410 level before slowing and holding around the levels, briefly dipping to below the 1.3405.
  • GBP: The market opened around the 1.6980-85 areas moving slightly higher before drifting into Tokyo lunch. The market reacted on the IMF announcement that an imbalance in the UK recovery will cause problems in the futures was a little late in announcement as I believe the HM Treasury had already noted it along with various think tanks several months ago if not longer. The move into London saw some reasonable early buying to test the 1.6995 levels before turning on the official opening for a steady fall back forcing through the bids and only struggling briefly around the 1.6950 levels continuing to the 1.6935 levels before holding the level in a similar manner to the Euro finishing the day around the 1.6945 levels. End of month buying in EURGBP did initially help the GBP lower however, the cross drifted from the attempt higher having only moved some 15 pips before failing.
  • JPY: While volumes in the market were limited the USDJPY was the exception with reasonable two volumes going through throughout the day pushing from the opening 101.85 levels and driving through the offers. The market stalled into the London session with leveraged accounts taking advantage to fade the rally, the market moved back to the opening levels before the buying reappeared pushing steadily back to the 102.00 and breaking through to push into further offers this time a little more heavy, the market topped just above the 102.15 levels.
  • AUD: As the USDJPY rose the Oz traded back with a broad base rally in the USD, dropping back from the opening 0.9405 levels having hit the 0.9415 highs to 0.9395 before holding steady for the rest of Asia and deep into the London session with the carry trade AUDJPY unable to push through the 96.00 level and kept in a tight range. NYK session with a strong USD saw the Oz drop further to the 0.9380 areas holding the 0.9375-85 for the most part before running out around the 85 levels.

Yesterday’s premiership results

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

JPY         Jobless Rate Jun A 3.70% | C 3.50% | P 3.50%

JPY         Household Spending Y/Y Jun A -3.00% | C -3.70% | P -8.00%

JPY         Retail Trade Y/Y Jun A -0.60% | C -0.40% | P -0.40%

GBP       Mortgage Approvals Jun A 67.2K | C 63K | P 61.7K

GBP       M4 Money Supply M/M Jun A 0.10% | C 0.00% | P -0.10%

USD       S&P/Case-Shiller Composite-20 Y/Y May  A 9.30% | C 9.80% | P 10.80%

USD       Consumer Confidence Jul A 90.9 | C 85.5 | P 85.2

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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