Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 103.88 | EURUSD 1.31929 | EURJPY 137.05 | AUDUSD 0.93367 | NZDUSD 0.83783 | USDCAD 1.08649 | EURCHF 1.20683 | USDCHF 0.91477 | GBPUSD 1.65768 | EURGBP 0.79587 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.92 | 103.7

EUR/USD             1.3217 | 1.3188

EUR/JPY               137.165 | 136.88

AUD/USD            0.9373 | 0.9333

NZD/USD             0.8406 | 0.8364

USD/CAD             1.0869 | 1.0844

EUR/CHF              1.2072 | 1.20655

USD/CHF             0.9151 | 0.91325

GBP/USD             1.6605 | 1.6572

EUR/GBP             0.7963 | 0.79555

 

For today

  • EUR: After some minor selling at the start of the session however, once the AUD numbers were released the market rose in line with the Oz with the Euro moving to above the 1.3215 levels over the course of an hour, and holding that level as we move towards London and a few numbers for the day. The market moving through the 1.3220 levels may cause a little bit of a short squeeze as it fills the gap created on Sunday/Monday opening and weak stops however the market is likely to run into offers around the 1.3240 areas and again around the 1.3280 levels, if it can get moving.  A push through the 1.3300 level will see some light stops however, at this point the German CPI numbers or US GDP numbers are massively out of line. Downside has strong bids appearing around the 1.3150-60 levels with a mixture below until 1.3120-10 where bids increase a little. A break below sees the next 100 pips vulnerable.
  • GBP: Cable has been reasonably quiet tracking the movement of the Euro for the most part with the EURGBP cross staying more or less in line with the close in NYK, moving from the opening 1.6575 levels the market has steadily risen to push once again through the 1.6600 levels and stalled at the 1.6605 area before moving into the grey hours. Offers from here with light stops likely on a break above the 1.6610 levels, on a push through 1.6610 it opens up the 1.6650 level with light offers before moving into stronger offers as the market approaches 1.6700. Downside sees a few bids below the 1.6540 holds the strongest bids for the moment. With bids moving into the 1.6500 levels and very few stops appearing until through the 1.6490 levels.
  • JPY: While the USDJPY has been on a downward trend for most of the session, the market opened around the 103.88 levels touching above the 103.90 level in early trading as early day traders bought in front of the usual early buying, today however, that early buying didn’t appear and from the opening in Tokyo the market has been a steady seller of USD’s as profit taking moved into the market and end of month flows, this took the market slowly but steadily down to the 103.70 areas into the grey hours as position squaring in front of the US GDP figure and tax manoeuvres strengthen the JPY. 104.30 remains the topside strong point with offers again from the 104.05 area onwards into the strong offers in the 104.20-30 area, a push through that level will see likely collection of stops from weak shorts and longer term longs adding and the market opens up to a fresh move towards 105.00, needless to say the 104.80 level onwards will see the same type of offers holding the levels. Downside through the 103.60 levels sees the market open up for a deeper test with some reasonable stops likely through 103.50-40, then a mixture from then on however, while the US maybe off on Monday it remains to be seen whether the buying of USD’s dries up in its quest for yield.
  • AUD: With a long weekend for the US the USD still sees profit taking appearing and long positions being cut, the Oz moved sideways having moved through the 0.9330-40 levels in LDN/NYK the market could not move back down through the level and held into the Asian session, even ignoring the Oz Capex numbers which overall were slightly weaker (private capex being the exception 1.1% vs -4.2% previously) and weaker new home sales the market pushed on triggering further stops after the release and a push through to trade comfortably above the 0.9370’s before drifting back to 0.9360 level once the action was over, one suspects for some time had run out to cover some of the shorts before the weekend. Topside offers from the 0.9370 levels onwards and into the 94 cent level, having been here already at the beginning of the month there will need to be a strong motive today to push it through the level one suspects however, that short term players will be waiting. Downside now sees the 0.9330-40 level acting as a minor support area and a push through will see light buying into the 93 cent levels and below to 0.9280 where a break here will trigger some stop in all likelihood, continuing through that level will see some bids through to 0.9240 and if we are there then the numbers in the US are good and the market will be ablaze.

Overnight News

JPY:

Japanese Sold Net 609 Billion Yen Overseas Debt Last Week

Japan to Scrap Some Capex Tax Breaks to Fund Corp Tax Cut: NHK

Abe May Name Ishiba to Japan Local Economy Cabinet Post: Sankei

JPY/KRW:

Japan Confident N. Korea Will Return Surviving Abductees: Furuya

AUD:

Australia Q2 business investment beats forecasts

Australia’s July Private New Home Sales Fall 5.7% M/m

NZD:

Fonterra’s Spierings Says Beingmate Deal Has Huge Potential

New Zealand Central Bank Says it Sold Net NZ$2 Million in July

CNY:

China May Open Stock, Bond Markets to More Countries: WSJ

RUB:

Russia to Take NATO Activity Near Border Into Account: Interfax

TWD/CNY:

Taiwan, China Next Round of Trade Talks Sept. 10-12: Comm. Times

VND/CNY:

Vietnam, China Agree to Negotiate South China Sea Disputes: News

 

Today’s data

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

AUD       Private Capital Expenditure Q2 A 1.10% | C -0.80% | P -4.20%

07:55     EUR        German Unemployment Change Aug P -6K

08:00     EUR        Eurozone M3 Y/Y Jul C 1.50% | P 1.50%

09:00     EUR        Eurozone Economic Confidence Aug C 101.5 | P 102.2

09:00     EUR        Eurozone Industrial Confidence Aug C -4.5 | P -3.8

09:00     EUR        Eurozone Consumer Confidence Aug (F) C -10 | P -8.4

09:00     EUR        Eurozone Services Confidence Aug C 3.5 | P 3.6

09:00     EUR        Eurozone Business Climate Indicator Aug C 0.1 | P 0.17

10:00     GBP       CBI Reported Sales Aug C 25 | P 21

12:00     EUR        German CPI M/M Aug (P) C 0.00% | P 0.30%

12:00     EUR        German CPI Y/Y Aug (P) C 0.80% | P 0.80%

12:30     USD       GDP (Annualized) Q2 (S) C 3.90% | P 4.00%

12:30     USD       GDP Price Index Q2 (S) C 2.00% | P 2.00%

12:30     USD       Initial Jobless Claims (AUG 23) C 299K | P 298K

14:00     USD       Pending Home Sales M/M Jul C 0.60% | P -1.10%

 

Harry Hindsight

  • EUR: For the time being the market seems to have run out of space and Euro’s managed to recover the losses of the past 24hrs, early selling continued in the Asian session and the market made lows below 1.3155 before finding support and holding for the session around the 1.3160 levels, the grey hours saw the first round of profit taking appearing in the market and the market was quickly taken back above 1.3175 and then steadily over the next 10 pips and into the London opening. London saw two way flows through the early part of the session. Having made its lows and rejected the levels later comments from the ubiquitous ECB unnamed source that a movement below 1.3000 would help alleviate the situation to some extent or gives the ECB more time to bury its head and hope for the best. The move in the NYK session took the market quickly to the 1.3210 levels and the market then remained around the 1.3200 levels for the remainder of the session, Talk of an option barrier at the 1.3150 area would explain the move back however, the movement seemed to be a more USD broad based slip as profit taking took shape against the USD as the market runs to the end of month and labour day bank holiday.
  • GBP: Cable started the day around the 1.6540 support area and continued into Tokyo testing only slightly below that area before a steady rise ensued after the Tokyo session started. Moving slowly to the 1.6560 levels the market was a little unsure and reversed during the session. The move into the grey hours saw profit taking from the Europeans pushing to the 1.6575 level into the London’s official opening, London initially couldn’t make their mind up and it took a short period before the market again rallied strongly and through the weak offers around the 1.6600 however, the move through the level was very limited and much of the edge was taken off the drive especially into the NYK session before starting a little of a drift during the rest of the day holding around the 1.6575 levels.
  • JPY: As with the other majors the market rejected its recent highs and with the end of month at hand the market saw a steady amount of selling pushing the USDJPY back away from the 104.30 resistance, and although the market again opened with strong buying the USDJPY was never able to move above the 104.20 area and started a steady decline back through 104.00 late in the session and continued steadily over the course of the day with plenty of two way trading occurring. Although this USD move was in line with the other majors the market was unable to move to far from the desired target and held around the 103.80 levels for much of the NYK session with brief attempts to the 104.00 areas before closing around the mid-level.
  • AUD: The Oz rose steadily throughout the session with the carry trade pushing through the 97.00 levels and the Oz doing plenty of work on the way. The move into London saw light day traders picking up the ball and running the market through the 0.9330-40 levels where the market had previously struggled this week. The move into NYK saw the Oz drifting off its highs however; it remained around the 0.9340 areas into the close. Chatter of improvements in commodity prices kept the Oz moving during early plays however, commodity prices at this point are linked more with the USD strength and geopolitical situations to a lesser extent.

Yesterday’s premiership results

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

EUR        German GfK Consumer Sentiment Sep A 8.6 | C 8.9 | P 9 | R 8.9

CHF        UBS Consumption Indicator Jul A 1.66 | C 2.06 | P 2.07

USD       Crude Oil Inventories A -2.1M | C 1.1M | P -4.5M

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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