Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.791 | EURUSD 1.33967 | EURJPY 137.705 | AUDUSD 0.93312 | NZDUSD 0.84879 | USDCAD 1.09025 | EURCHF 1.21749 | USDCHF 0.90877 | GBPUSD 1.69131 | EURGBP 0.79207 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.885 | 102.73

EUR/USD             1.3400 | 1.33925

EUR/JPY               137.80 | 137.66

AUD/USD            0.9332 | 0.9306

NZD/USD             0.8507 | 0.8485

USD/CAD             1.0909 | 1.0900

EUR/CHF              1.2175 | 1.2171

USD/CHF             0.9089 | 0.9082

GBP/USD             1.6924 | 1.6906

EUR/GBP             0.7923 | 0.79145

 

For today

  • EUR: The market made an attempt to push through 1.3400 touching through but not having enough traction drifted back off through the 1.3395 level in slow trading. Topside sees light offer from the 1.3400-10 with additional offers around the 1.3435-50 levels. A move through the 1.3470 area will likely see a mixture of stops and offers and the offers quickly thicken into the 1.3500. Bids still remain however, the market has opened up to the downside with congestion into the 1.3300 level but a solid push through the 1.3370 levels will probably trigger stops before reaching light bids through the 1.3300 areas.
  • GBP: Cable initially slipped from the 1.6912 areas to trade down to the 1.6905 levels. The market failed to push any further in light trading and was squeezed higher through the 1.6915 quickly and then slowly rose to above the 1.6920 level slowly climbing a few pips over the remainder of the day. A solid move through the 1.6900 opens up the key 1.6800 levels however, getting through that level is the thing and with little news and data the market has been dominated by Euro and USD movements than anything else. Topside has light offers on any move higher before getting closer to the 1.7000 levels with strong offers into the level before some decent stops appear above.
  • JPY: USDJPY seems to have run out of time with end of week selling balancing a light day and trending the market slowly lower from the highs just below 102.90 to below the 102.80 levels in slow trading. For the topside although the market moved through the 103.00 level in late NYK the market was not able to continue the move in the face of decent offers through there likely to move back into the 103.20 areas. A break through those levels will open up another attempt through the 104.00 levels however, this 103.00-104.00 area  has held since the market moved down from the 105 areas at the turn of the year and is likely to be full of leveraged top pickers and exporter offers. Downside the market is reasonably open with light bids around the 102.70 areas and every 20 pips seeing a similar pattern strong bids will likely be around the 102.30 areas where the market moved up through yesterday, a good initial claims in the US will underpin the market and may give it some impetus to push through the 103.00 levels however, you know how that one works and a poor one will leave the market unsure in the run to NFP.
  • AUD: The market opened roughly on the 100DMA drifting through the level and dropping to the 0.9310 level as the import price number came in worse than expected triggering the lows. The market did recover however; it was unable to push through the 100DMA and has since drifted to the 0.9320 levels. Light offers now appear around the 0.9330 level and although not particularly strong it is likely to be light through 0.9350, better offers are likely above the 0.9380 levels and into the 94 cent areas with weak stops through that level. Support at the 93 cent area is back to 0.9280 before the market opens up to the 0.9230 areas and strong bids suspected having held in that area through May.

Overnight News

IMF:

Interest rates rising could thwart G20 growth goal

IMF/CNY:

China should set lower 2015 GDP growth target of 6.5-7%

China must contain vulnerabilities to meet growth target

AUD:

Asia agribusiness giants tie up to boost China-Australia trade

GBP:

UK consumer confidence drops for the first time in 6months

RUB:

Russia warns sanctions will backfire on western countries

JPY:

BoJ should study shifting focus to zero rates in future Kiuchi

June real wages fall but summer bonuses up

 

Today’s data

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

GBP       GfK Consumer Sentiment Jul A -2 | C 2 | P 1

AUD       Import Price Index Q/Q Q2 A -3.00% | C -1.40% | P 3.20%

AUD       Building Approvals M/M Jun A -5.00% | C 0.20% | P 9.90%

JPY         Labour Cash Earnings Y/Y Jun A 0.40% | C 0.70% | P 0.80%

JPY         Housing Starts Y/Y Jun A -9.5% | C -11.20% | P -15.00%

07:55     EUR        German Unemployment Change Jul C -5K | P 9K

07:55     EUR        German Unemployment Rate Jul C 6.70% | P 6.70%

09:00     EUR        Eurozone Unemployment Rate Jun C 11.60% | P 11.60%

09:00     EUR        Eurozone CPI Estimate Y/Y Jul C 0.50% | P 0.50%

09:00     EUR        Eurozone CPI – Core Y/Y (JUL A) C 0.80% | P 0.80%

11:30     USD       Challenger Job Cuts Y/Y Jul P -20.20%

12:30     CAD       GDP M/M May C 0.30% | P 0.10%

12:30     USD       Employment Cost Index Q2 C 0.50% | P 0.30%

12:30     USD       Initial Jobless Claims (JUL 26) C 306K | P 284K

13:45     USD       Chicago PMI Jul C 63.2 | P 62.6

 

Harry Hindsight

  • EUR: The market did rise from the 1.3410 levels to touch above the 1.3415 levels before it moved back off in a very quiet Asian session. The move into London saw a little more movement drifting to the 1.3400 levels where the market held for several hours into the NYK session, the support eventually gave way as the market generally ignored the bland numbers. GDP numbers in the US tipped the market eventually and triggered some light stops through the 1.3400 levels dropping initially to below the 1.3370 levels before finding sufficient support to hold the levels dipping only slightly through the level. Another pregnant pause ensued holding the 1.3380-70 levels before moving back to above the 1.3395 level but struggling to break back through the 1.3400 levels. Talk of option expiries seem to be a little over done and one suspects that shorts took advantage of the drop and turned the market back on itself.
  • GBP: Cable was little different to the Euro moving from the opening 1.6945 levels to trade above the 1.6955 levels before a steady drift through the remainder of the session to hold into London 1.6940. London were quick sellers but although the market followed the trend of the Euro with the cross EURGBP rising only minimally over the course of the day. The US numbers dropped the Cable to the 1.6905 and finally broke through the 1.6900 level to 1.6890 before starting a light recovery to the 1.6915 levels. With little tier 1 data for the Cable the whole day was dominated by the Euro.
  • JPY: As with the rest of the market USDJPY moved quietly in Asia not moving much from the 102.10 levels, the move into the London session saw the market slowly rising to push through the offers to the 102.30 levels the last line in the sand, the US numbers saw the market break quickly triggering stops as the market drove through the next two levels 102.50 and again 102.70 before finally hitting the stronger offers around 102.80. Having pushed through the levels of resistance the market initially stalled at the 103.00 levels, the market then spiked to the 103.10 and one would guess that a light option barrier was broken as it retraced from the 103.09 level quickly and held in the 102.80 levels into the close.
  • AUD: The Oz was dominated by the carry trade and as the USDJPY slowly rose the market in the Oz slowly drifted lower, holding steady in Asia just above the 0.9380 levels before starting a steady dip into the London session. The sudden move higher on the US numbers in USDJPY forced the Oz lower as both the AUDJPY held its levels and USD strengthened the Oz dropped off from the 0.9370 levels to the 0.9310 levels before holding 0.9320 levels, the breakthrough of the 96.00 level triggered the Oz higher through 0.9350 before the market steadied and returned to the 0.9330 levels.

 

Yesterday’s premiership results

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%

CHF        UBS Consumption Indicator Jun A 2.06 | P 1.77 | R 1.8

CHF        KOF Leading Indicator Jul A 98.1 | C 101.1 | P 100.4

EUR        Eurozone Economic Confidence Jul A 102.2 | C 101.8 | P 102 | R 102.1

EUR        Eurozone Industrial Confidence Jul A -3.8 | C -4.5 | P -4.3

EUR        Eurozone Consumer Confidence Jul (F) A -8.4 | C -8.4 | P -7.5

EUR        Eurozone Services Confidence Jul A 3.6 | C 4.5 | P 4.2 | R 4.4

EUR        Eurozone Business Climate Indicator Jul A 0.17 | 0.20 | P 0.22 | R 0.21

EUR        German CPI M/M Jul (P) A 0.30% | C 0.20% | P 0.30%

EUR        German CPI Y/Y Jul (P) A 0.80% | C 0.80% | P 1.00%

USD       ADP Employment Change Jul A 218K | C 241K | P 281K

USD       GDP (Annualized) Q2 (A) A 4.00% | C 3.10% | P -2.90% | R -2.10%

USD       GDP Price Index Q2 (A) A 2.00% | C 1.80% | P 1.30%

CAD       Industrial Product Price M/M Jun A -0.10% | C 0.30% | P -0.50%

CAD       Raw Materials Price Index M/M Jun A 1.10% | C 0.60% | P -0.40%

USD       Crude Oil Inventories A -3.7M | P -4.0M

USD       FOMC Rate Decision A 0.25% | C 0.25% | P 0.25%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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