Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 104.054 | EURUSD 1.3192 | EURJPY 137.267 | AUDUSD 0.92974 | NZDUSD 0.83496 | USDCAD 1.09838 | EURCHF 1.2076 | USDCHF 0.91539 | GBPUSD 1.65792 | EURGBP 0.79574 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               104.12 | 103.75

EUR/USD             1.3208 | 1.31785

EUR/JPY               137.295 | 137.025

AUD/USD            0.9302 | 0.9272

NZD/USD             0.8349 | 0.8311

USD/CAD             1.0998 | 1.0972

EUR/CHF              1.20815 | 1.2074

USD/CHF             0.9164 | 0.9141

GBP/USD             1.6595 | 1.6566

EUR/GBP             0.7961 | 0.79555

 

For today

  • EUR: With a hangover from yesterday’s movements the USD found itself under pressure as equity markets moved lower, for the Euro this meant little and the market having initially tested below yesterday’s lows moved off the 1.3180 level and pushed steadily back through the 1.3200 level to hold quietly into the grey hours. Light offers to the topside through 1.3220 leave the market open for further gains to the 1.3250 levels before meeting slightly stronger resistance from there every 10-20 pips are small offers from profit taking from current longs while light stops remain just that. Downside through the 1.3180 level is likely to see some moderate stops but by no means easy to get at and likely to find reasonable support before touching them however, if it gets through there is space for a further movement to the 1.3130-00 levels with nothing really suspected other than profit taking from some of the older shorts in the market.
  • GBP: The market in Cable dipped from the close, opening around the 1.6580 areas before moving to below the 1.6570 levels in early trading, as with the Euro the market recovered its losses and again moved up into the mid 90’s before stalling in front of the 1.6600 levels. Offers into 1.6600 seem to be strong enough in quiet markets to keep a lid on the market however, not likely to hold out if there is any impetus to buying, Offers continue into the 1.6620 areas before a break of 1.6640 and likely stops opening a run to the 1.6700 levels. Downside has bids around the 1.6540 levels for near term support; light bids then are likely through to the 1.6500 levels. While EURGBP is off the lows from July the market in Cable is likely to see some control on its movement by the cross and maybe this is the one to watch in any movement higher.
  • JPY: USDJPY opened around the 104.05 levels and initially moved to above the 104.10 levels however, with equity markets slipping back the USD came under pressure and minor reports in the papers kept the market tumbling from the highs, trend support was taken out through the 103.90’s and the market eased back through the 103.80 level to bottom around the 103.75 area before regaining some light traction back to the 103.90 levels. The move was helped by cross selling of the pair as the recent continual and gradual move higher came to a stop. 104.30 remains the key level for a break out to the topside with offers still fairly strong for the moment, a lack of real money buying today seemed to ease the pressure to the topside and a move through the 104.30 could only likely to occur with a large increase in durable goods through the level will likely see only weak offers until above the 104.70 level where I would suspect stronger offers making an appearance. Downside sees some bids around the 103.60 levels and through there likely stops to cover the move up from 103.40 and then the start of strong buying.
  • AUD: Having closed around the 0.9298 areas the market found itself caught up with the NZ numbers and dropping back sharply with the AUDNZD cross rising but insufficient to keep up with the steady 40 pip move lower for the NZD, with the Oz slipping back some 20 pips or so the market didn’t recover until the Oz consumer sentiment number hit and helped the market to regain its original levels and push briefly back above the 0.9300 levels. Light offers through the 0.9320 level increases as the pips disappear and the market stops above the levels are not expected until firmly through the 0.9330 levels. Downside bids are a bit patchy and mixed with light stops until the market hits the 0.9240 areas and lows from mid-month and last week.

Overnight News

NZD:

N.Z. Exports Fall to 11-Month Low on Logs, Infant Food

New Zealand’s Exports to China Drop in Longest Run in 18 Years

Statistics N.Z. Excludes Aircraft from July Import Figures

New Zealand Affirmed AA at S&P; Outlook Stable

New Zealand’s Links with China Pose Risks to Growth: S&P

NZ July Low-Deposit Home Loans Fall to 7.9% of New Lending: RBNZ

AUD:

Australia ANZ Weekly Consumer Sentiment Rises 0.9% to 113.5

USD: Obama Won’t Seek Syria Approval on Airstrikes, White House Says

U.S. Fed Will Need to Change Guidance, Bullard Tells FT

USD/CAD:

Buffett Said to Help Finance Burger King-Tim Hortons Deal: WSJ

GBP:

U.K. Advertised Salaries Rise 0.9% Y/y in July

CNY:

China July Leading Economic Index Rises 1.3% M/m to 297.7

China May Amend Law to Allow Local Govt. Bonds Sale: Daily

 

Today’s data

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

NZD       Trade Balance (NZD) Jul A -692M | C -475M | P 247M | R 242M

JPY         Corporate Service Price Y/Y Jul A 3.70% | C 3.70% | P 3.60%

CNY        Conference Board Leading Index Jul A 1.30% | P 1.30%

12:30     USD       Durable Goods Orders Jul C 7.40% | P 1.70%

12:30     USD       Durables Ex Transportation Jul C 0.50% | P 0.80%

13:00     USD       House Price Index M/M Jun C 0.30% | P 0.40%

13:00     USD       S&P/Case-Shiller Composite-20 Y/Y Jun C 8.20% | P 9.34%

14:00     USD       Consumer Confidence Aug C 89.1 | P 90.9

 

Harry Hindsight

  • EUR: With a limited market London being closed the markets the opening range almost defined the day, the market on the opening was extremely busy with plenty of two way business with the support level of 1.3220 disappearing as the market opened through the levels and around the 1.3200 levels. The market moved to below the 1.3190 in the first hour as the sellers kept the pressure on before steadily rising through the session back to above the 1.3200 levels. With London out the market moved lower during the grey hours and again attempted the downside. The limited market managed to take the Euro off its lows however, even into the NYK session the range of 1.3210-1.3185 defined the day with the market continually drifting to the downside from the quick moves higher. With Yellen more hawkish and Draghi more dovish the commentary from Jackson Hill kept the USD strong through the session but was unable to capitalize on the Euro. I’d mention the IFO numbers however; the numbers had already been overshadowed by the Draghi comments.
  • GBP: Having opened lower in line with the USD strength against most of the majors the market held around the 1.6540 before starting a steady rise through the day. A continual rise in Asia and then into the London non-market took the Cable close to the 1.6600 level again failing on the spike and then spending the NYK session holding around the 1.6580 levels having recovered its early losses. EURGBP was no different than the rest of the market opening some 15 pips lower and never closing the gap, holding around the 0.7975 levels for the Asian session the market again moved quickly to below 0.7965 as Europe entered the market and then spent the day basing off the 0.7955 levels as everything Euro was off the book.
  • JPY: As with the other majors opened above the 104.20 levels and was never able to push through the 104.30 area with strong offers still in play and protecting the topside. The Asian session held the levels through into the end of the session and early London keeping to roughly 10 pip range around the opening levels. The market saw strong range selling as the Asian market disappeared and the pair was forced to below the 103.90 levels touching the 103.85 levels a couple of times into the early NYK session. The market then kept to a quiet tight range with less activity trading around the 104.00 area having filled the gap on the charts and closing into the 104.05 levels.
  • AUD: While the Oz opened only slightly lower the market quickly dropped off from the opening 0.9310 levels to 0.9295 areas before starting a steady climb higher pushing over the Asian session to above the 0.9320 levels into the London session holding for a period around the 0.9310 before NYK sold the Oz quickly back to the previous lows and a base of 0.9290. The late session held around the 0.9290-0.9300 for the balance of the session.

Yesterday’s premiership results

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

EUR        German IFO – Business Climate Aug A 106.3 | C 107.1 | P 108

EUR        German IFO – Current Assessment Aug A 111.1 | C 112 | P 112.9

EUR        German IFO – Expectations Aug A 101.7 | C 102.1 | P 103.4

USD       New Home Sales Jul A 412K | C 426K | P 406K | R 422K

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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