Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 104.065 | EURUSD 1.31673 | EURJPY 137.028 | AUDUSD 0.93067 | NZDUSD 0.8326 | USDCAD 1.09513 | EURCHF 1.20819 | USDCHF 0.91751 | GBPUSD 1.65411 | EURGBP 0.79607 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               104.165 | 103.94

EUR/USD             1.3171 | 1.31525

EUR/JPY               137.15 | 136.805

AUD/USD            0.9323 | 0.9300

NZD/USD             0.8369 | 0.8329

USD/CAD             1.0956 | 1.0918

EUR/CHF              1.2098 | 1.2078

USD/CHF             0.9185 | 0.9173

GBP/USD             1.6560 | 1.6537

EUR/GBP             0.79625 | 0.7949

 

For today

  • EUR: The Euro moved slowly in the early part of the session holding around the 1.3170 levels until deep into the Tokyo session however, strong EURJPY selling from above the 137.15 levels and back through the figure pushed the Euro leg through to below the 1.3155 level triggering some weak stops before grinding to a halt, even though the market has made limited moves it’s not been able to regain the opening levels and as with previous days the volumes have been reasonable in the market given the lack of real direction. Offers to the topside are patchy until the 1.3190 area where the market is likely to see stronger offers; a move through the 1.3220 levels will likely see weak stops forming in a market that still sees buyers looking for a bounce against the trend. The downside now looks very open and apart from the sentimental levels 1.3150 and again towards the 1.3100 levels one suspects the only buying would be real money and profit taking from medium term shorts, weak stops are likely below the 1.3150 levels and stronger stops probably any move through the 1.3100 levels as it opens up a far deeper move into last year’s lows to 1.2800 areas. Expectations on attempts to deflect crumbling inflation numbers are likely to be just that another head in the sand ploy to wait out the consequence of worsening numbers, whether at this late stage asset purchases will do the trick remains to be seen however, an example of too little too late can be seen in Asia if it would care to look.
  • GBP: After a tentative start to the day with the market moving higher slowly the market still managed to touch below the 1.6540 areas to make fresh lows before starting a minor recovery and moving steadily to the 1.6560 areas. With light offers from the 1.6560 levels the market is likely to struggle with no tier 1 data, and the 1.6600 levels remains the line in the sand for the moment with a mixture of stops and offers just above the levels the only topside interest of note however, this will reverse several days of steady pressure and we’ve held this area previously. On the downside the bids to 1.6500 remain intact and the market is likely to take more direction from the Euro.
  • JPY: As with the opening yesterday, initial buying from real money failed to push much beyond the 104.15 levels before starting a move back to the 104.00 levels and a dip to the 103.95 area. Offers still hold the topside to the 104.30 area with likely stops building strongly behind that level and clearing the way for a move towards the 104.80 levels where the next likely offers abound, these offers as with the 104.00 level are likely to move back to the 105.20-30 areas. Downside sees USD buying as the continuation for yield buyers continues and while the moves have been quick to the downside stabbing through supportive areas this only indicates that the buying is coming to market only on dips once the Tokyo market has left for the day however, 103.80-90 still remain broadly the buying areas with little in the way of stops showing.
  • AUD: The Oz has slowly made gradual headway moving from the opening 0.9305 levels to above the 0.9325 level with the market hoping for a bounce from the lows on commodity prices, this too me looks a little optimistic given the recent rises in the USD a continuation of which is likely to revalue commodities according to its strength. Offers are above the 0.9330 level for the moment with a likely second set behind the 0.9350 areas, a break through the 0.9360 levels will likely trigger some breakout stops before running into further resistance from the 0.9380 areas. Downside has been well traversed over the month however, weak stops likely through the 0.9280 levels with support in front of the levels albeit weak before better bids show from 0.9260 down to the stronger 0.9240 levels.

Overnight News

JPY:

Abe Adviser Sees Risk in Raising Sales Tax as Planned: Sankei

Japan to Adopt Variable Pension Payout Formula Next Yr: Mainichi

NZD:

Fonterra’s Spierings Says Milk Prices to Recover on China Buying

NZD/CNY:

NZ’s Fonterra to tie-up with China’s Beingmate on infant formula

CNY:

Chinese Banks Reluctant to Loan Money on Rising NPL: Sec. News

AUD:

Australia 2Q Construction Work Fell 1.2% Q/q; Est. 0.5% Fall

RBA Says Supply of Mortgage Finance in Australia Is ’Ample’

 

Today’s data

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

06:00     EUR        German GfK Consumer Sentiment Sep C 8.9 | P 9

06:00     CHF        UBS Consumption Indicator Jul P 2.06

14:30     USD       Crude Oil Inventories C 1.1M | P -4.5M

 

Harry Hindsight

  • EUR: A weak attempt to break the downside during the Asian session saw the market move from the opening 1.3195 levels forced the Euro to 1.3180 before failing and bouncing back higher as the market moved into the Tokyo session. The movement higher continued deep into the Asian session moving back through 1.3200 and to the 1.3215 levels as the market entered the grey hours and then the London open. Selling back through the 1.3200 levels the market held in a narrow range until the NYK session saw option plays taking over the market and a drop from above the 1.3200 levels and through the lows triggering weak stops and a fall back to the 1.3165 levels, the bounce was that of a wet cat and the market held for the most part in the mid 1.3160’s
  • GBP: Strong Cable buying in Asia (for Asia that is) took the Cable off its lows below 1.6570 back through the opening 1.6578 area and up to the 1.6595 levels, having reached that level the market held for a good period not able to push through the 1.6600 levels again and then started to slip towards the lows from the grey hours onwards. Strong Durable goods released in the US then helped the USD rise against the GBP and the market tumbled back pushing again through the 1.6550 levels before holding on the 1.6540 areas into the close. With little in the way of news, apart from the neverendum’s televised shout off between the two opposing sides gave the media something to do but nothing market moving.
  • JPY: The USDJPY rose from the Sydney market through into the 104.10 from the opening 104.05 levels before finding strong offers and equity markets suffering from profit taking on the topside, USDJPY dropped quickly back and while the move was sharp and caught weak stops the market found reasonable bids around the 103.85 and only after a significant selling managed to touch the 103.75 levels. The market bounced from the lows moving back to trade in the 103.80-90 areas for the balance of the session and remained mired in the areas through early London and only started to find fresh buying into the NYK session. US numbers moved steadily higher and eventually pushed back into the 104.15 levels and held the level for a significant part of the NYK session finishing the day roughly unchanged. Minor reports in the media limited much of the action however, the two way flows continued with real money either side of the market with yield vs. exporter conversions most likely.
  • AUD: The Oz fell back with the Trade balance numbers out of NZ as AUDNZD cross remained a little static given the selling of NZD. The Oz eventually dipped back to below 0.9275 before bouncing once the market calmed a little, having made its way back to the opening 0.9295 levels the market struggled to find direction for several hours. The move into the grey hours the Oz started to move slowly higher gaining ground in the AUDJPY carry trade and pushing from 96.50 and pushing through the 97.00 levels late in the day and in the NYK session. The peak in the Carry trade led to the highs in the Oz as the market touched the 0.9330 levels and into some reasonable offers adding to the offers above 97.00 in AUDJPY. The market eventually settled baco to just above the opening holding around the 0.9305 areas in quiet trading.

Yesterday’s premiership results

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%

USD       Durable Goods Orders Jul A 22.60% | C 7.40% | P 1.70% | R 1.70%

USD       Durables Ex Transportation Jul A -0.80% | C 0.50% | P 0.80% | R 1.90%

USD       House Price Index M/M Jun A 0.40% | C 0.30% | P 0.40%

USD       S&P/Case-Shiller Composite-20 Y/Y Jun A 8.10% | C 8.20% | P 9.34%

USD       Consumer Confidence Aug A 92.4 | C 89.1 | P 90.9 | R 90.3

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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