Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 103.928 104.20-30 | EURUSD 1.32425 1.3215-20 | EURJPY 137.614 137.76-81 | AUDUSD 0.93171 0.9315-20 | NZDUSD 0.84044 0.8400-05 | USDCAD 1.09445 1.0950-60 | EURCHF 1.21021 1.2100-05 | USDCHF 0.91386 0.9155-60 | GBPUSD 1.65734 1.6565-70 | EURGBP 0.79903 0.7975-80 |

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               104.49   104.12

EUR/USD             1.3221   1.3185

EUR/JPY               138.05   137.45

AUD/USD            0.9321   0.9289

NZD/USD             0.8405   0.8336

USD/CAD             1.0972   1.095

EUR/CHF              1.2111   1.20925

USD/CHF             0.9179   0.9155

GBP/USD             1.6576   1.6501

EUR/GBP             0.80045 0.7970

 

For today

• EUR: Mixed reviews of the Jackson Hole but with the market taking the commentary as more hawkish than is normal from Yellen, this caused the Euro to open beneath the previous lows moving from the 1.3200 levels and pushing into the upper 1.3180’s in early trading, although the markets have been fairly active the Euro has slowly risen back above the 1.3200 levels as we move to the grey hours the market slowly rises. The break through the 1.3220 levels would suspect the downside again weak to further selling however, the market now opens up to the 1.3100 levels however, one would suspect the gap to be filled on the charts, 1.3180 has some congestion around and the market will struggle around the level before renewing any move lower, the topside offers are likely around the 1.3220 areas as those that missed the move look to add to shorts. Weak stops above the level may open up a short squeeze however; 1.3250-80 are likely to be offered.
• GBP: Cable suffered as much as the Euro with the market opening around the 1.6550 levels and dropping to the 1.6540 levels before holding the line into Tokyo, from there its been a slow recovery filling the majority of the gap on the charts and holding above the 1.6560 levels as the market moves into London. Offers around the 1.6600 have over the last few days proved to be too much without impetus to move through and those offers are likely to remain with a day with no real data available to the market. Through the level a congregation of stops however, they are not large and are patchy over the next 40 pips and into the 1.6650 level providing the next resistant point for the moment. Downside sees a congested area around the 1.6500 levels and very little likely in front, the market is still a little nervous to the downside and maybe mixed below the 1.6500 area.
• JPY: USDJPY opened above the 104.20 levels, having cleared a goodly portion of the offers from the 104.00 levels on Friday the market continued to attempt to break higher throughout the session moving around the 104.15-25 levels all session with good volumes going through in a two way market. However, the offers still remain to the 104.30 levels and given the volumes would be indicative of exporter offers facing off against Japanese flows to yield. A push through the 104.30 area should open up a fresh attempt at the 105.00 not seen since the beginning of the year and possible if the belief of hitting the 2% inflation rate remains in the Japanese market at least. Downside remains open that is once the flow to yield boys have sated their lust for it. With bids from here to the 103.50 areas and light stops below 103.40 likely to be met by renewed buying. Only through the 102.80 levels is there likely to be stronger selling as the retail market becomes stuck the wrong side.
• AUD: The AUD was in line with the other currencies from the opening however all though the market opened only a few pips lower and the fall from the opening was limited to just below the 0.9395 areas, its spent the session recovering and filling the gap to move into London little changed from Friday, with no real news or data to help it along the market has been fairly stable with the carry trade steadily pushing through the 97.00 levels. 0.9330 levels remain offered for the moment with the offers stretching back to 0.9350 before the market opens up a little and 94 cent only lightly defended, a move through this level though opens the market up to more offers and likely short term leveraged accounts looking for a quick move lower. Downside has light bids on the already penetrated 0.9280 levels before finally heading to the stronger 0.9240 areas where the market has stalled a few times over the course of the month.

Overnight News

JPY/NOK:

Norway Buys Yen Bonds as Local Pension Fund Cuts

JPY:

Japan Budget Requests for Fiscal 2015 May Exceed 100t Yen: Asahi

Most Japanese Support Abe’s skipping of Shrine Visit: Mainichi

GBP/EUR:

U.K.’s Cameron Threatens EU Exit If Proposals Rejected: Times

EUR:

French PM Valls’s Office Says Montebourg Crossed a Line: Figaro

CNY:

China May Start Nationwide Property Tax Next Year: China Daily

China Audit Shows Slowing of Local Govt Debt Growth: Daily

China May Announce Revised Budget Law This Week: Info. Daily

TWD/CNY:

Taiwan May Let Investors Buy China’s A Shares: Economic Daily

Taiwan Insurers with $580 Billion Chase Yuan Debt: China Credit

RUB:

Russian Economy Minister Urges against Tax Increase: Vedomosti

AUD:

Western Australia’s Rating Cut to Aa1 from Aaa by Moody’s

NZD:

N.Z. Statistics Rejects Recommendation for Monthly CPI

Today’s data

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

08:00     EUR        German IFO – Business Climate Aug C 107.1 | P 108

08:00     EUR        German IFO – Current Assessment Aug P 112.9

08:00     EUR        German IFO – Expectations Aug P 103.4

14:00     USD       New Home Sales Jul C 426K | P 406K

 

Weekend News

GBP:

BOE’s Broadbent Says Labour Data Is Key in Post-Crisis World
BOE’s Broadbent Says Path of Rates to Be ‘Materially Different’
JPY:

BoJ’s Kuroda: Central Banks Must Fight Deflation by All Means
Kuroda Says Using Foreigners to Fill Job Gaps Worth Considering
Japan Defence Ministry to Seek Record 5.5T Yen Budget: Nikkei
Japan May Expand Tax Break on Housing-Support Gifts: Nikkei
Tepco Said to Plan Coal-Fired Plant Near Tokyo, Nikkei Reports
EUR:

ECB Ready to Act as Draghi Sees Inflation Expectations Slide
Spain’s Guindos Says 1.5% Growth in 2014 Still Possible: EP
France’s Montebourg Opposes ‘Dogmatic’ Deficit Reduction: Monde
EUR/UAH:

Merkel Seeks Ukraine Peace Momentum for Putin-Poroshenko Talk
CAD:

Weak Canada Job Market Gives Time to Keep Rates Low, Poloz Says
SEK:

Sweden Lowers Growth Forecast as Crisis Message Draws Rebuke
USD/JPY:

Citigroup May Take 1st Bids on Japan Retail Ops Sept 12: Sankei
NZD:

New Zealand’s PM Makes NZ$218M Election Pledge for Home-Buyers
CNY/USD:

China Calls on U.S. to Stop Close-In Air Surveillance
CNY:

China Probes Two Top Officials in Shanxi amid Anti-Graft Drive
China Rail Investment Needs to Seek Private Funds: Premier Li
USD/CNY/IDR:

U.S.-China Rivalries Threaten Region, Says Yudhoyono: Australian

Harry Hindsight

• EUR: The market opened above the 1.3280 levels before drifting back below the level in early Tokyo, buying in EURJPY helped the market move steadily back higher as the market focused on selling the JPY across the board however, with offers at the 138.00 level and offers in USDJPY towards the 104.00 level the Euro took the brunt of the move. By the time the market moved into the grey hours the markets highs were made just below the 1.3300 levels. The move into London saw the market drifting off back to the opening levels, the market continued to drift with some light choppy movements but moving to the 1.3260 levels and into early NYK. Mixed signals from the meeting in Jackson Hole sent the USD higher against everything and the Euro was forced quickly lower on the opening and continued in the early part of the NYK session. The Euro quickly broke lower dropping through the 1.3250 levels before a brief pause before heading to just above the 1.3220 levels and holding the strong level and a steady rise through to 1.3240 before holding in place for several hours, a brief short squeeze from profit taking late into the session took the market above the 1.3260 levels before dropping back into the close around the 1.3240 areas.
• GBP: Cable drifted from the opening 1.6580 levels to trade around the 1.6575 levels for a good portion of the day, before the market caught a steady bid as GBPJPY moved slowly higher through the balance of the session and into the London market holding around the 1.6590 levels for a few hours before again moving lower as the USD started to strengthen, with a neutral tone from Jackson Hole the USD remained reasonably strong in a quiet market to some extent, even so there was a brief attempt to push the 1.6600 level before dropping quickly lower again and trading to a fresh low to 1.6560-65 and then a steady rise back to the 1.6575 levels.
• JPY: The USDJPY was quiet until the market opened in Tokyo and then buying from the real money accounts entered the market and took the market from the opening 103.85 levels for a concerted effort to breach the 104.00 level for a few hours. The local market ran out of patience eventually and rejected the level for the session and USDJPY started a drift back to below the 103.70 levels into the grey hours. London had little interest in the pair and the market eventually renewed the drift lower touching the 103.65 levels before dipping and triggering weak stops to force the market to 103.50 areas and bouncing once the market had finished with the selling back to the 103.75 levels, above mentioned mixed signals from Jackson Hole the market moved swiftly higher and although the first move through 104.00 was not a clear break and moved back as the balances offered were quickly sold it wasn’t long before the market moved back through the level rising to close to the 104.20 areas before the buying ran out of room and drifted lower to finish below the 104.00 levels and holding the 103.90-95 levels for several hours into the close.
• AUD: Buying in the carry trade gradually moved higher and thus Oz was pushed higher unlike most of the market against the USD, moving from the 93 cent levels and triggering weak stops through the 0.9310 levels, as the market in USDJPY dipped the steady rise in AUDJPY continued the move higher in the Oz topping just below the 0.9330 levels and holding that area into the London session. Although Oz was unable to push higher it held those levels for several hours and into the NYK session before any reversal was seen with the drop coming at the same time as the rest of the currencies however, it was less deep and recovered quickly as the move in AUDJPY increased, the Oz finished the day above the 0.9315 area into the close, making the Oz one of the few to kick the USD strength move.

 

Friday’s premiership results

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

12:30     CAD       CPI M/M Jul A -0.20% | C -0.10% | P -0.10%

12:30     CAD       CPI Y/Y Jul A 2.10% | C 2.30% | P 2.40%

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

12:30     CAD       BoC CPI Core Y/Y Jul A 1.70% | C 1.90% | P 1.80%

12:30     CAD       Retail Sales M/M Jun A 1.10% | C 0.60% | P 0.70% | R 0.90%

12:30     CAD       Retail Sales Less Autos M/M Jun A 1.50% | C 0.60% | P 0.10% | R 0.30%

Stay lucky

Andy