Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 103.846 | EURUSD 1.32813 | EURJPY 137.918 | AUDUSD 0.93024 | NZDUSD 0.84047 | USDCAD 1.09419 | EURCHF 1.21052 | USDCHF 0.91147 | GBPUSD 1.65791 | EURGBP 0.80108 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.96 | 103.715

EUR/USD             1.3290 | 1.32735

EUR/JPY               138.00 | 137.815

AUD/USD            0.9324 | 0.9300

NZD/USD             0.8415 | 0.8388

USD/CAD             1.0947 | 1.0929

EUR/CHF              1.2107 | 1.2102

USD/CHF             0.9120 | 0.9107

GBP/USD             1.6586 | 1.6570

EUR/GBP             0.8014 | 0.80095

 

For today

  • EUR: A very quiet session with the market staying in a very tight range as the market runs towards a long weekend and the US Jackson Hole meeting. Dipping from the opening levels the market stalled around the 1.3275 levels and started to slowly rise even with the media running stories on the unhealthy balances within the European banks of several countries and calls for the ECB to intervene in the matter however, chance would be a fine thing. The market moved slowly back rising to above the 1.3285 levels. Offers are likely to run from here through the 1.3300 level not particularly strong and the market is open to the topside but without any tier 1 data it’s going to be a struggle one suspects. The downside has good bids remaining from the 1.3240 areas down through the 1.3220 level. A break down through this level opens up the downside further with the 1.2800-1.3200 range from last year, but in all likelihood not today.
  • GBP: With a slightly large range Cable moved steadily lower in early trading moving from the opening 1.6580 areas to 1.6570 before a steady rise back into the upper 80’s as the market moves towards the grey hours, with everything quietly moving to a long weekend in the UK the market certainly looks to be reflecting that and very little is expected through the day, light offers around the 1.6600 are not likely to stand up to any strong buying however, where would the buying come from and what could possibly stimulate the market sufficiently, maybe commentary however, parliament is in recession and those that have come back because of geopolitical tensions are less likely to be talking about the economy. Through the 1.6600 level the market is fairly open with offers likely to be light and around the sentimental type levels 1.6650, 1.6700 with no real stops likely. Downside is the focus for the stops with weak stops likely below 1.6550 and possibly light bids into the 1.6520 areas.
  • JPY: No real change on the USDJPY with good offers in front of the 104.00 levels attracting the short term players to fade any moves above the 103.90 areas and then buying back on short dips as the market still sees the buying for yield holding the market around the 103.70, nothing concrete is in the market and the buying seems to be triggered by those dips and has kept it in a reasonably tight 20 pip range for the most part over the past 24hours. As stated the market will need to break through the 104.00 levels and once through is likely to see weak stops from the range players and possibly a sharp quick move to the 104.50 areas before the offers dominate again, saying that the likelihood of sharp moves lower are possible with the buyers literally coming to market only when it suits them to do so and quick moves like yesterday’s dip to the 103.60 may not be uncommon on a quiet day. Downside bids really come in around the 103.40 and again 103.20 areas with the better bids closer to the 103.00 levels, chatter in the market has the market split on the next direction but as long as JPY sellers out of Japan continue the downside has to be respected.
  • AUD: Both the Oz and NZD remain bid into the Jackson Hole weekend, having rallied from its lows yesterday the Oz has continued a steady rise back through 93 cent level to push above 0.9320 into the grey hours with the carry trade doing some work. With the market likely to be quiet for the London session at least the 0.9340 level remains the offering area and stops are not likely to kick in until the market breaks through the 0.9360 areas and even then 0.9380 is likely to halt the rise on a quiet day. 94 cent having been breached in July remains the better offer areas to the 0.9450 levels. Downside remains limited with the 0.9240 level holding the market on two separate occasions this month and the line in the sand for the moment; through 0.9240 there are likely stops below 0.9180, so the market is a little open to both sides.

Overnight News

JPY:

Tokyo Govt May Invest Some Public Funds in Stocks: Nikkei

Japan to Offer Tax-Free Investing Program for Children: Sankei

Abe Plans to Replace LDP Secretary General in Reshuffle: Nikkei

Fukushima Govt May Accept Nuclear Interim Storage Plan: Sankei

JPY/TWD:

Japan Exchange, Taiwan Study Mutual Listing of Stocks, ETFs

CNY:

China May Toughen Moves for Economic Stability: Sec. Journal

AUD:

A$ Real Rate 44% Higher in 2013 Due to Mining Boom: RBA Paper

Australia Says Key Budget Programs to Grow Less Than Real GDP

 

 

Today’s data

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

12:30     CAD       CPI M/M Jul C -0.10% | P -0.10%

12:30     CAD       CPI Y/Y Jul P 2.40%

12:30     CAD       BoC CPI Core M/M Jul C 0.00% | P 0.10%

12:30     CAD       BoC CPI Core Y/Y Jul P 1.80%

12:30     CAD       Retail Sales M/M Jun C 0.60% | P 0.70%

12:30     CAD       Retail Sales Less Autos M/M Jun C 0.60% | P 0.10%

 

Harry Hindsight

  • EUR: Gains from the FOMC minutes continued to add weight to the USD with the Euro dropping back in Asia to trade through the 1.3245 levels however, the market held the areas into the grey hours and the market started to rally higher during that point to above the 1.3265 levels, London followed through and while the numbers revealed still underlying weakness in the PMI numbers the market moved back in an attempt to push through the 1.3280 levels, initially failing until the move into NYK. Having pushed through the downside and reportedly option barriers profit taking appeared which led to the Euro finding some respite in the face of opposing fundamental news over the day with talk of macro and institutional shorts covering through the 1.3250 levels. The market held above the 1.3280 levels for much of a quiet evening session and into the close.
  • GBP: Early selling of Cable in the same manner as the Euro pushing from early high of 1.6600 and pushing down through the 1.6570 levels before starting a recovery into the grey hours. Unlike the Euro the Cable seemed to be along for the ride and held around the 1.6590 level for much of the day with a brief attempt through the 1.6600 into the mid NYK session. The market then drifted through the session for a close around the 1.6580 levels, a less than sterling retail sales number didn’t help the market particularly in either direction. PSBR was less impressive and national media were quick to jump on the failings of Chancellor Osborne.
  • JPY: USDJPY had a similar story to that of the Euro, in that the market moved strongly towards the 104.00 levels from the opening in Tokyo from the lows below 103.70 and back through the opening 103.75 levels the market moved strongly to above the 103.95, as with the Euro profit taking and strong offers kept the market from moving through the 104.00 levels and held around the 103.85-90 areas into the grey hours and a London market with less interest in the pair. The market however, barely backed away from the highs dipping only on the NYK numbers to touch 103.60 in a quick move before moving back to the 1.0375-85 areas.
  • AUD: The Oz opened around the 0.9290 levels and moved quietly, just prior to the release the market started to ease back from the 0.9290 levels and triggered some weak stops through the 0.9280 area, the release finished the move with the market gapping slightly and trading below the 0.9240 areas. Asia was unable to reply to the move and the market held the 0.9250 levels for several hours. London moved into the market and the Oz moved steadily higher as the market focused more on the fundamentals of Australia rather than China. By the time the market moved into NYK and touching back above the 0.9310 levels and holding the 93 cent level for the balance of a quiet session.

Yesterday’s premiership results

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

CHF        Trade Balance (CHF) Jul A 3.98B | C 1.91B | P 1.38B | R 1.41B

EUR        France Manufacturing PMI Aug (P) A 46.5 | C 47.9 | P 47.8

EUR        France Services PMI Aug (P) A 51.1 | C 50.3 | P 50.4

EUR        Germany Manufacturing PMI Aug (P) A 52 | C 51.8 | P 52.4

EUR        Germany Services PMI Aug (P) A 56.4 | C 55.5 | P 56.7

EUR        Eurozone Manufacturing PMI Aug (P) A 50.8 | C 51.4 | P 51.8

EUR        Eurozone Services PMI Aug (P) A 53.5 | C 53.6 | P 54.2

GBP       Retail Sales M/M Jul A 0.10% | C 0.40% | P 0.10% | R 0.20%

GBP       Public Sector Net Borrowing (GBP) Jul A -1.1B | C 1.9B | P 9.5B | 9.8B

USD       Initial Jobless Claims Aug 16 A 298K | C 299K | P 311K | R 312K

USD       Leading Indicators Jul A 0.90% | C 0.60% | P 0.30%

USD       Philly Fed Survey Aug A 28 | C 18 | P 23.9

USD       Existing Home Sales Jul A 5.15M | C 5.01M | P 5.04M

EUR        Eurozone Consumer Confidence Aug (A) A -10 | C -9 | P -8.4

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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