Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.91 | EURUSD 1.33202 | EURJPY 137.084 | AUDUSD 0.93036 | NZDUSD 0.84267 | USDCAD 1.09412 | EURCHF 1.21107 | USDCHF 0.90922 | GBPUSD 1.66168 | EURGBP 0.80159 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.23 | 102.90

EUR/USD             1.3324 | 1.3303

EUR/JPY               137.33 | 137.03

AUD/USD            0.9318 | 0.9285

NZD/USD             0.8435 | 0.8373

USD/CAD             1.0955 | 1.0938

EUR/CHF              1.2114 | 1.21055

USD/CHF             0.9106 | 0.90905

GBP/USD             1.6625 | 1.6604

EUR/GBP             0.8017 | 0.8011

 

For today

  • EUR: The market held in early trading around the opening 1.3320 levels, moving into the Tokyo session with barely a pulse, RBA’s Stevens’ parliamentary statement began to make the market move as the AUD rose and the market saw small EURAUD selling in the market. EURUSD therefore weakened a little pushing down through the exhausted 1.3320 levels to trade through 1.3305 before holding in the area as we run to the grey hours. For the moment the market still has bids slightly through the 1.3300 levels however, weak stops are likely through the level as we open up the downside for a deeper move, light bids then appear around the 1.3280 areas however, one suspects it will take less time to traverse the next big figure. Topside offers from 1.3360 now dominate and only a push back through the 1.3400 will negate this downward move, which suggests there will be some stops above that area.
  • GBP: The market has been very quiet in the GBP over the Asian session opening around the 1.6620 are the market held for a good portion of the session in the area before sliding down through 1.6610 to touch the 1.6605 deep into the session. Topside offers seem to be congregated around the 1.6650 for the most part with light offers leading to that level a break through there may see a short squeeze higher filling the gap before running into further offers around the 1.6690-1.6700 levels and again stronger levels around 1.6720/30 offers. Downside is a little more open however the market really needs to push below the 1.6550 levels to open up the 1.6600-1.6200 range from earlier in the year, whether Carney is playing a balancing act of keeping GBP in a tight range remains to be seen but given all the decent numbers the market holds steadier against the Euro than the USD.
  • JPY: USDJPY pushed gradually through the 102.95 level touching the 103.00 level a couple of times before breaking through and triggering stops in a run to the 103.20 areas late in the session with the All industry activity number coming in a lot weaker than expected, the market was caught a little by surprise with the move up and struggled to cover cleanly giving the move a little more exaggeration than you’d expect. Numbers wise it was the second month of increase in exports for the Japanese although imports still continue to weigh on the trade balance numbers. The market holds for the moment above the 103.00 level with the market quiet, topside offers 103.20-30 and real money, a move through this level will likely see a fresh attempt at the 104.00 level which we’ve not seen since the beginning of April. Downside has light bids through the 103.00 level and weak stops below 102.80, whether the real money buyers are willing to continue buying into the new levels remains to be seen however, yield searching dominates the Japanese market.
  • AUD: Mixed fortunes for the Oz with the market nervous over the early part of the Tokyo session, having opened around the 0.9305 levels the market tested lower into the Leading index number and the usual up and down movement we often see in the Oz from numbers, Stevens’ comments led initially to the market moving to above the 0.9310 level before the number chased it back down and through 0.9290 shortly thereafter, as the full report hit the market on his testimony the market again moved to the topside this time pushing through the 0.9315 levels to extend the gains however, with the USDJPY rising quickly late in the session the Oz was forced lower as offers in the carry trade kept a lid on things and the Oz extended the lows slightly below 0.9290 before settling in a tight range below 0.9300. Offers strongest above the 0.9340 levels with weaker offers slightly in front of those levels, a move through the 0.9340 level will likely see light stops clearing the way to a modest 0.9360 areas before the offers start to thicken, Downside remains fairly open with a move through the 0.9280 level opening a deeper move to the 0.9220 levels however, we’ve been here before and its likely to be all about peripheral moves in other currencies than the Oz especially with the FOMC minutes due today.

Overnight News

AUD: Stevens: Risk-Reward Case for FX Intervention Yet to Stack Up

Stevens Says He’s Prepared to Consider Lower Rates If Helpful

RBA’s Stevens Says Risk A$ Will Fall Materially Underestimated

Stevens: Value in Maintaining Sense of Steadiness, Stability

JPY:

Japan export rebound offers hope for economic growth

Death Toll from Hiroshima Landslides Rises to 18; 13 Missing: NHK

JPY/USD:

Japan to Allow SDF Supply Arms, Fuel to U.S. Forces: Yomiuri

USD/JPY:

Citigroup Considers Exiting Japan Consumer Banking, NHK Reports

JPY/IDR:

Japan to Resume Chicken Imports From Indonesia, Nikkei Says

CNY: China 2H Monetary Policy Should Tilt Towards Easing: Sec. News

China Jan.-July State-Owned Cos. Revenue Rises 5.8% Y/y

CNY/JPY:

China Fines Japan Car Parts Makers 1.24b Yuan in Monopoly Probe

EUR:

German Govt. Pension Liabilities Rise to EU487.1b, Bild Reports

NZD:

N.Z. July Residential Property Listings Fall 7% Y/Y

RUB:

Russia May Scrap Plan to Allow Sales Tax Next Year: Vedomosti

 

 

Today’s data

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

JPY         Trade Balance (JPY) Jul A -1.02T | C -0.77T | P -1.08T | R -1.07T

AUD       Westpac Leading Index M/M Jul A -0.10% | P 0.10%

JPY         All Industry Activity Index M/M Jun A -0.40% | C -0.20% | P 0.60%

06:00     EUR        German PPI M/M Jul C 0.10% | P 0.00%

06:00     EUR        German PPI Y/Y Jul P -0.70%

08:30     GBP       BoE Minutes C 0–0—9 | P 0–0–9

10:00     GBP       CBI Trends Total Orders Aug C 4 | P 2

12:30     CAD       Wholesale Sales M/M Jun C 1.30% | P 2.20%

14:30     USD       Crude Oil Inventories P 1.4M

18:00     USD       FOMC Minutes

 

Harry Hindsight

  • EUR: Euro’s drifted steadily through the course of the first half of the session moving from the opening 1.3363 area and keeping to a tight range through the Asian session to trade around the 1.3350 areas into the grey hours. London did very little with the EURUSD and most of the action was through the EURGBP where the market moved back above the 0.8000 level with the UK numbers. The move into NYK saw more movement with the US numbers in line with expectations and the USD moving up a leg against most of the other currencies. EUR/USD dropped back to the 1.3320 area where the market held the support areas for the balance of the session.
  • GBP: So Carney’s weekend comments had nothing to do with the numbers released and one wonders if it’s a game he’s playing, the market drifted slowly in Asia moving from the 1.6728 areas to below 1.6720 in early Tokyo and held around the level into the grey hours, early sellers then moved into the market as longs cut positions taking Cable steadily through the 1.6700 levels and too the 1.6690 level into the number release, the market dropped quickly on weaker numbers and maybe Carney got his weekends to talk mixed up, There was a gap from the 1.6690 level to 1.6660 as the numbers took the market by surprise believing as I did that Carney was talking from the view point of already knowing the inflationary news, which goes to remind that nothing is certain when central bank governors talk. The market held for a time around the 1.6640-50 areas but a stronger USD in the NYK session sent the market lower again and the market held around the 1.6620 level after a steady decline and a quiet afternoon session saw little difference.
  • JPY: With the USD in ascendancy the market in USDJPY began to move higher once the Asian market closed up shop, moving from the opening 102.55 areas to touch above 102.65 in the Tokyo session the market was unable to make any headway until the London numbers had been released and the rise started gently at first but moving steadily nonetheless throughout the session easing off only once the market moved towards the close and a finish above the 102.90 after grinding through the offers above 102.80.
  • AUD: The AUD rose from the early lows below 0.9320 levels pushing through the opening 0.9325 to trade above the 0.9340 levels as cross trading dominated the market, with poor NZ numbers sending the AUDNZD higher and that produced the highs, it was unable to push any further in the Asian session and into the grey hours drifted a little as the range players moved in and turned it back to the opening areas. London moved in a similar fashion to the Asian session and faced the same hurdles and although it did set a new higher it was only marginally better and ran into  the same offers as earlier. USD strength moved into the market after the release of US numbers and the Oz dipped back to the lows before triggering weak stops from early buyers and tumbled to the 0.9305 levels before finding sufficient support to hold the market into the back end of the session, it was a long session with the bids slowly being removed and a test of the 93 cent level into the close and subsequent reopening in Sydney.

Yesterday’s premiership results

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%

EUR        Eurozone Current Account (EUR) Jun A 13.1B | C 21.3B | P 19.5B | R 19.8B

GBP       CPI M/M Jul A -0.30% | C -0.20% | P 0.20%

GBP       CPI Y/Y Jul A 1.60% | C 1.80% | P 1.90%

GBP       Core CPI Y/Y Jul A 1.80% | C 1.90% | P 2.00%

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

GBP       RPI Y/Y Jul A 2.50% | C 2.60% | P 2.60%

GBP       PPI Input M/M Jul A -1.60% | C -1.00% | P -0.80%

GBP       PPI Input Y/Y Jul A -7.30% | C -6.40% | P -4.40% | -4.50%

GBP       PPI Output M/M Jul A -010% | C 0.10% | P -0.20% | -0.10%

GBP       PPI Output Y/Y Jul A -0.10% | C 0.00% | P 0.20% | R 0.30%

GBP       PPI Output Core M/M Jul A 0.00% | C 0.00% | P 0.00% | R -0.20%

GBP       PPI Output Core Y/Y Jul A 0.90% | C 0.90% | P 1.00%

USD       CPI M/M Jul A 0.10% | C 0.10% | P 0.30%

USD       CPI Y/Y Jul A 2.00% | C 2.00% | P 2.10%

USD       CPI Core Y/Y Jul A 1.90% | C 1.90% | P 1.90%

USD       CPI Core M/M Jul A 0.10% | C 0.20% | P 0.10%

USD       Building Permits Jul A 1.05M | C 1.00M | P 0.97M | R 0.96M

USD       Housing Starts Jul A 1.09M | C 0.97M | P 0.89M | R 0.95M

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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