Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.568 | EURUSD 1.33636 | EURJPY 137.068 | AUDUSD 0.93246 | NZDUSD 0.84743 | USDCAD 1.08864 | EURCHF 1.21141 | USDCHF 0.9065 | GBPUSD 1.67285 | EURGBP 0.79884 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.65 | 102.56

EUR/USD             1.3364 | 1.33535

EUR/JPY               137.125 | 137.00

AUD/USD            0.9343 | 0.9317

NZD/USD             0.8484 | 0.8426

USD/CAD             1.0898 | 1.0887

EUR/CHF              1.2115 | 1.2113

USD/CHF             0.90715 | 0.9065

GBP/USD             1.6728 | 1.6715

EUR/GBP             0.79895 | 0.79875

 

For today

  • EUR: The Euro opened quietly through into the Tokyo session from 1.3363 areas. The release of the RBA minutes pushed the Euro lower as EURAUD selling entered the market and the Euro slipped to just below the 1.3355 levels to make the lows. Since then the market has been very quiet and volumes light as the market holds just above yesterday’s lows. Bids from here into the 1.3350 areas down into the mid 1.3330’s before the likelihood of any stops appear through there the bids again thicken around the 1.3320 areas and likely light protection from option interest into the 1.3300 level. Topside still appears to be light to the 1.3400 level however, through there are light stops before stronger offers appear and limit the range to around the 1.3420 areas.
  • GBP: The quiet before the storm maybe? The market has slowly slipped from the 1.6725/27 areas from the opening affected by the RBA minutes much the same as the Euro with GBPAUD selling entering the market to touch the 1.6715 levels close to yesterday’s lows. The market since then has held in the mid-level of the range as a raft of inflationary numbers are due to light the day up and if the weekends Carney comments have anything to say then the numbers may be a little higher than expected. Topside offers start from the 1.6740 level and while in appearance they look light the market has had little appetite in pushing through the level for the moment on what I’d call as non-news unless the inflationary figures are out of line today, through there the market could possibly see a short squeeze back towards the 1.6800 level from the breakdown last week and offers begin to strengthen through the level. Downside bids seem to be strong below the 1.6700 level around the 1.6680 area where the market held from last week’s sell off with weak stops through the 1.6660 area suspected. A push through those levels opens up a test of the 1.6600 areas and the 1.6400-1.6600 range from the beginning of the year.
  • JPY: USDJPY moved higher just before the Tokyo opening as early Japanese real money moved in before the RBA minutes, taking the market from the opening 102.55 to test the 102.65 levels and although we spent plenty of time towards those highs it was unable to push any higher much the same as the NYK session the previous day. The market since then has hovered around the 102.60 levels and waits for direction from the rest of the sessions. 102.80 provides the first level of decent offers with those offers deep into the 103.00 level as exporters and profit taking are suspected to be waiting, a move through the 103.30 levels will open up the next 70 pips or so but it is likely to be a strong battle through those levels. Downside while looking to be the weak side has light bids from the 102.40 areas and suspected real money flows interested in moving to yield likely to be buyers on dips to contain the market in a narrow band.
  • AUD: A quiet opening in Sydney saw the market holding the 0.9325 levels before dipping into Tokyo as early sellers covered longs before the release of the RBA minutes, the low was made just after the release and although there was little difference generally in the tone, comments about stability in rates eventually took the AUD higher and pushed through the 0.9335 level as the market was caught holding shorts through the 0.9330 levels pushing to above the 0.9340 level and holding in that area for the balance of the session. Although I’d suspect some light stops to the topside the better offers remain around the 0.9360 levels and it is likely to be a slow grind through that level before light stops are seen, this however, opens up another test through the 94 cent area with offers likely through to the 0.9420 levels before becoming a little more open. Downside has very little strength to it however, without some off hand comments the downside bids are weak until through the 93 cent level and better bids start to appear around 0.9280 and then every 20 pips or so to the stronger 0.9220 levels.

Overnight News

AUD:

RBA repeats most prudent course is period of rates stability

RBA says significant degree of uncertainty on growth outlook

AUD/IDR:

Australia says to restore intelligence and military cooperation with Indonesia

NZD:

Treasury cuts 2014-15 growth forecast to 3.6% vs. 4%

English: no room for significant loosening of purse strings

N.Z. Cuts 2015-16 surplus forecast to NZ$818M vs. NZ$1.26B

N.Z. Treasury forecasts growth slowing to 2.6% in 2015-16

CNY:

China is to spend US$1.0B on massive Caribbean resort in Antigua and Barbuda

China hopes WTO can resolve differences and sign deal on simplifying global customs rules

China 2H CPI May Rise 2.5% on Year: Shanghai Securities News

China to Set Up Bank Deposits Monitoring System: Sec. Journal

China’s State Council Issues Measures to Develop Northeast Areas

ILS:

Ceasefire extend for a further 24hrs

JPY:

Tepco Considers Extra Measures for Fukushima Freezing Plan: NHK

 

 

Today’s data

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

NZD       PPI Inputs Q/Q Q2 A -1.00% | C 0.70% | P 1.00%

NZD       PPI Outputs Q/Q Q2 A -0.50% | C 0.80% | P 0.90%

NZD       RBNZ 2-Year Inflation Expectation Q3 A 2.20% | P 2.36%

08:00     EUR        Eurozone Current Account (EUR) Jun C 21.3B | P 19.5B

08:30     GBP       CPI M/M Jul C -0.20% | P 0.20%

08:30     GBP       CPI Y/Y Jul C 1.80% | P 1.90%

08:30     GBP       Core CPI Y/Y Jul C 1.90% | P 2.00%

08:30     GBP       RPI M/M Jul C -0.10% | P 0.20%

08:30     GBP       RPI Y/Y Jul C 2.60% | P 2.60%

08:30     GBP       PPI Input M/M Jul C -1.00% | P -0.80%

08:30     GBP       PPI Input Y/Y Jul C -6.40% | P -4.40%

08:30     GBP       PPI Output M/M Jul C 0.10% | P -0.20%

08:30     GBP       PPI Output Y/Y Jul C 0.00% | P 0.20%

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

08:30     GBP       PPI Output Core Y/Y Jul C 0.90% | P 1.00%

12:30     USD       CPI M/M Jul C 0.10% | P 0.30%

12:30     USD       CPI Y/Y Jul C 2.00% | P 2.10%

12:30     USD       CPI Core Y/Y Jul C 1.90% | P 1.90%

12:30     USD       CPI Core M/M Jul C 0.20% | P 0.10%

12:30     USD       Building Permits Jul C 1.00M | P 0.97M

12:30     USD       Housing Starts Jul C 0.97M | P 0.89M

 

Harry Hindsight

  • EUR: With GBP making the early moves across the board the Euro was left drifting over the course of the day, moving from the opening levels just below the 1.3400 level the market was never quiet able to reach that level and although Asia held around the 1.3390 levels for much of the session the market again pushed lower into the grey hours. London held the 1.3385 areas for much of the early session before NYK stepped in to follow through with several rounds of EURGBP selling as the market read into the Carney comments probably more than they should have and the break in the early part of the NYK session triggered weak stops through the 1.3380 levels dropping Euro back to the 1.3360 areas and a dip below 1.3350, as London left the market the NYK session was a little lacklustre holding around the 1.3360/65 levels for the long run to the end of the day.
  • GBP: With wage structures being cast aside in favour of interest rate rises the crucial part of the commentary of timing was left unsaid however, pressure from back bench MP’s may prove to be more crucial in the timing than would normally be expected with the expected timings for any rate rise close to the next general election a delay beyond the Q1 expectations would stink of collusion with the current chancellor and so undesirable and likely to cause some heated discussions along the way. So no change then really , Cable opened higher around the 1.6720 areas and quickly made highs to the 1.6739 level where profit taking appeared from the short to medium term players kicked in, the market then spent the best part of the day pushing to the 1.6735 levels and never able to break through those topside offers. A little strength in the USD from the opening in NYK sent the Cable back to its lows if only for a few hours with the London market still willing to buy into any weakness on the dip, before the market petered out late into the session for a finish just below the highs.
  • JPY: USDJPY opened being dragged higher with the move in GBP triggering cross stops in several pairings taking USDJPY to the Asian highs around the 102.45 from the opening level some 10 pips lower. The failure to push high left the market a little empty and JPY strengthened a little during mid-session with the USDJPY drifting back to the 102.25 areas before starting a steady climb into the London session. The opening in London saw the USDJPY back to the highs and a steady push into early NYK to above the 102.55 level as USD continued to strengthen against most currencies, The remainder of the day was dull for the pair and it ran out trading around the 102.55 levels and unable to move high for an attempt through the 102.80 resistance.
  • AUD: Early Oz was dominated by the cross buying the GBP and while it didn’t slip to far down the opening saw the market on the 0.9315 level which seemed to be a sticking point throughout the day with only minor dips below to the 0.9310 levels in Asia. The market hedged higher into the London session but remained contained in a 0.9315-25 range for the most part AUDJPY buying into the NYK session helped to balance the AUD during the strong phase of USD buying however again the market was limited to a degree not quiet reaching the 0.9335 level and drifting back into the 0.9325 levels in the quiet run to the end of the session.

Yesterday’s premiership results

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

GBP       Rightmove House Prices M/M Aug A -2.90% | P -0.80%

EUR        Eurozone Trade Balance (EUR) Jun A 13.8B | C 14.9B | P 15.3B | R 15.2B

CAD       International Securities Transactions (CAD) Jun A -1.07B | C 14.68B | P 21.43B

USD       NAHB Housing Market Index Aug A 55 | C 53 | P 53

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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