Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 103.764 | EURUSD 1.32596 | EURJPY 137.579 | AUDUSD 0.92889 | NZDUSD 0.83818 | USDCAD 1.09705 | EURCHF 1.21117 | USDCHF 0.91341 | GBPUSD 1.65956 | EURGBP 0.79902 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.965 | 103.675

EUR/USD             1.32605 | 1.3242

EUR/JPY               137.73 | 137.47

AUD/USD            0.9292 | 0.9235

NZD/USD             0.8377 | 0.8347

USD/CAD             1.0985 | 1.0965

EUR/CHF              1.2116 | 1.21105

USD/CHF             0.91455 | 0.9134

GBP/USD             1.6600 | 1.6564

EUR/GBP             0.7996 | 0.7987

 

For today

  • EUR: USD continues to rally through the session pushing the Euro slowly lower from the opening 1.3260 levels and light support. The market eased through the 1.3260 level and triggered some weak stops likely longs set during yesterday’s session. The market pushed down into the low 1.3240’s before running into further light bids, while volumes have been reasonable the market EURJPY offers in front of the 138.00 level and a strongly bid USDJPY helped push the Euro through the bids. Downside bids continue through 1.3240 however, the 1.3220 being the next level and congested area previously however, the market has now moved into the next range and although 1.3220 represents a weak level 1.3100 is the next level in the sand. The market to the topside will have offers building all the way up through the 1.3300 level and again around the 1.3350 areas with little in the way of stops.
  • GBP: Cable held up in the early part of the session trading back to the 1.6600 levels from an opening only a little away. The market then started a slow drift lower with the Euro as the USD continues to rally steadily. Cable dropped to below the 1.6570 levels before holding. Obviously the fact that there’s likely to be a hike early next year probably around the same time that the BoE in all likelihood. With leveraged and real money buying the USD’s the move lower for Cable is only likely to be slowed by EURGBP movements however. 1.6550 was a sticking point on the way up Last year and is likely to see light bids in the area before it opens up for a move into the 1.6400 levels. With light stops through that level the 1.6500 is less likely to be strongly defended and only strong retail sales numbers are likely to deflect the movement. Topside offer are likely to show around the 1.6700 area now with the market looking a bit light until deeper into the mid-levels. Overall the market is a lot more open than we’ve seen for a while.
  • JPY: The market in the USDJPY held the 103.70 hours until we moved into the Tokyo session and from the fix onwards the market moved steadily towards the 104.00 level never quiet getting there but holding around the 103.90 areas for much of the session as the flow to yield continues. The market struggled above the 103.90 area running into strong real money offers and possibly option barriers (light) but remained around the 103.90 into the grey hours. Offers from the 103.90-104.20 area dominate the market for the moment with stops building above the levels into the 104.40 areas before fresh offerings appear and build from then on. Downside is fairly open with any movements to the downside seeing real money entering the market as and when with no fixed areas really showing until lower in the 103.20 areas and down to 102.80.
  • AUD: The Oz opened around the 0.9290 levels and drifted in early trading down to the 0.9280 areas before finding initial support from bottom pickers, with the push buy USDJPY through the 103.80 area the bids gave way and the market dipped to the 0.9270 levels the flash PMI reading in CNY killed the Oz with the market quickly gapping to below the 0.9250 area before finding better support, with a good spread of sellers holding the market to that area over the course of several hours. 0.9240 provides light support for the moment with weak stops just below until a better support area appears from the 0.9220 area, with these levels seen in May and June, the bids are likely to move down to the 92 cent level before giving ground and opening up the downside through 90 cent. Topside is weakly offered up through the 93 cent levels with stronger offers likely around the 0.9340 area and then 0.9380, near stops likely through the 0.9290 levels from where we moved down from but they are light one suspect.

 

Overnight News

CNY:

China August HSBC flash PMI slips to 3-month low

China 2H Fiscal Spending May Grow About 5.7% Y/Y: Sec. News

China July International Services Trade Deficit $15.3b

JPY:

Japan Considers Earmarking 1t Yen for Stimulus: Nikkei

Japanese Buy Most Foreign Short-Term Debt in Four Years

JPY: Japan Defence Min. to Request Record Budget in Fiscal 2015: NHK

JPY: Markit/JMMA Japan Aug. Flash Manufacturing PMI 52.4 vs 50.5 in July

NZD:

New Zealand Consumer Confidence Falls to 10-Month Low, ANZ Says

Asia:

EM Asia Gross External Funding Needs ‘Moderating,’ Fitch Says

 

 

Today’s data

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

AUD       Conference Board Leading Index Jun A 0.40% | P 0.20%

JPY         Japan Manufacturing PMI Aug (P) A 52.4 | C 51.7 | P 50.5

CNY        HSBC Manufacturing PMI Aug (P) A 50.3 | C 51.5 | P 51.7

06:00     CHF        Trade Balance (CHF) Jul C 1.91B | P 1.38B

07:00     EUR        France Manufacturing PMI Aug (P) C 47.9 | P 47.8

07:00     EUR        France Services PMI Aug (P) C 50.3 | P 50.4

07:30     EUR        Germany Manufacturing PMI Aug (P) C 51.8 | P 52.4

07:30     EUR        Germany Services PMI Aug (P) C 55.5 | P 56.7

08:00     EUR        Eurozone Manufacturing PMI Aug (P) C 51.4 | P 51.8

08:00     EUR        Eurozone Services PMI Aug (P) C 53.6 | P 54.2

08:30     GBP       Retail Sales M/M Jul C 0.40% | P 0.10%

08:30     GBP       Public Sector Net Borrowing (GBP) Jul C 10.1B | P 9.5B

12:30     USD       Initial Jobless Claims Aug 16 C 299K | P 311K

14:00     USD       Leading Indicators Jul C 0.60% | P 0.30%

14:00     USD       Philly Fed Survey Aug C 18 | P 23.9

14:00     USD       Existing Home Sales Jul C 5.01M | P 5.04M

14:00     EUR        Eurozone Consumer Confidence Aug (A) C -9 | P -8.4

 

Harry Hindsight

  • EUR: A steady trend lower over the course of the day, moving from the opening 1.3320 levels the market held up early in the session and started to move lower during mid Tokyo as USD continues to strengthen. Moving into the grey hours just above the 1.3300 levels the market dipped through into the London session as the German PPI numbers came in a little worse than expected, pushing eventually to just below the 1.3280 and then holding the levels for several hours until pushing quickly through to the 1.3260 and triggering weak stops through the level. The market then held into the close, weakening against a falling GBP the market ended the day only just short of the lows.
  • GBP: The early session drifted in the same manner as the Euro with slow USD strength moving into the market and into the London session and the release of the BoE minutes showing a split for the first time in a number of years, while the consensus was for all 9 members voting for no change the national media had talked about a couple of the MPC members likely to vote for a rise. The market leapt higher from the news causing a minor short squeeze through the 1.6630 to touch just short of 1.6680 before starting a drift low having quickly retraced to the 1.6650 levels. As the market moved deep into the NYK session the market pushed lower and over a couple of hours the market was back to the 1.6620 opening levels and dipping through the level triggered weak stops to the 1.6590 before holding into the close.
  • JPY: The USD continued to rise across the board and USDJPY having opened around the 102.90 level pushed through the 103.00 levels and struggled for several hours around the 103.20 area into the London session gradually grinding through strong offers and pushing into NYK around the 103.40 level and still finding plenty of sellers, with the FOMC minutes indicating a rate rise on the horizon the market moved through the 103.40 and quickly moved to the 103.70 areas struggling again at the next level of resistance around 103.80 before closing just short of the high.
  • AUD: While the USD did strengthen against the Oz it took its time and the market was caught in a narrow range moving from the 0.9300 opening, a little jumpy with the Leading index and Steven’s testifying moving the market in a 20 pip range early on, the market rallied to above the 0.9310 levels as Stevens’ comments remained fairly dovish before the USDJPY started its rally, with the Oz again under pressure the market moved through the 0.9290 level. The move into the grey hours saw the early players eager to push the Oz through the 0.9280 levels the market held and although the market didn’t bounce to far and remained in touch with the level until the NYK session started. Having regained the high ground in NYK the FOMC release dropped the Oz quickly back to the 0.9280 levels where the support again held into the close.

Yesterday’s premiership results

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%

EUR        German PPI M/M Jul A -0.10% | C 0.10% | P 0.00%

EUR        German PPI Y/Y Jul A -0.80% | P -0.70%

GBP       MPC Official Bank Rate Votes A 2–0—7 | C 0–0—9 | P 0–0–9

GBP       MPC Asset Purchase Facility Votes A 0–0—9 | C 0–0—9 | P 0–0–9

GBP       CBI Trends Total Orders Aug A 11 | C 4 | P 2

CAD       Wholesale Sales M/M Jun A 0.60% | C 1.30% | P 2.20%

USD       Crude Oil Inventories A -4.5M | C -1.75M | P 1.4M

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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