Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 103.729 | EURUSD 1.31822 | EURJPY 136.737 | AUDUSD 0.93567 | NZDUSD 0.83832 | USDCAD 1.08615 | EURCHF 1.20633 | USDCHF 0.91512 | GBPUSD 1.65859 | EURGBP 0.79478 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.84 | 103.655

EUR/USD             1.3187 | 1.31745

EUR/JPY               136.85 | 136.67

AUD/USD            0.9360 | 0.9345

NZD/USD             0.8384 | 0.8358

USD/CAD             1.0863 | 1.0855

EUR/CHF              1.2067 | 1.20625

USD/CHF             0.9157 | 0.9149

GBP/USD             1.6592 | 1.6581

EUR/GBP             0.7948 | 0.79445

For today

• EUR: A very quiet day as the market leads into Eurozone CPI numbers and a long weekend for the USD, with the market moving in the 1.3180-85 range for much of the session before the market started to dip as we move to the grey hours. Offers really appear around the 1.3220 levels with weak stops just beyond the 1.3230 area at the bottom of last Friday’s close, with a lack of movement to the topside yesterday on numbers the market really needs to break this level to regain any of the losses over the past couple of weeks, even if that level breaks the market will likely still struggle at the 1.3300 levels, for the downside bids into the 1.3150 levels as talk remains of option barriers continuing to be protected however, a break here will open a test of 1.3100 with again waiting bids likely and then the 1.3000-1.2800 range is opened up and new barriers to be tested.
• GBP: A very quiet day for the Cable with the market holding around the 1.6585 levels for the most part, there was early Tokyo buying however, this only managed to push through the 1.6590 levels, offers still abound above the 1.6600 levels with range plays likely until the Eurozone CPI number is out of the way, above the 1.6620 starts to see light stops forming however, it is light and from there mixed with little indication and/or numbers for the UK to drive the market. The downside is very little different to the topside with the downside showing light bids through 1.6570 and better bids sitting on the 1.6540 support areas, through there a mixture takes over and 1.6500 act as sentimental support area a breach of which still leaves the market in a congested area through to 1.6400. Watch for EURGBP moves for a direction one imagines with little in the UK to stir the market.
• JPY: USDJPY rose slightly from the closing ranges in NYK however, it came late in the session with the market marking time around the 103.70 areas, with speculation that Abenomics is failing with mixed results at best the market still remains stuck with Yield buyers buying into the exporter sellers and limited plays in the USDJPY available and everything happening in the cross JPY pairs. The market eventually moved to the grey hours on its highs chasing a 20 pip range for the day with a raft of indeterminate numbers with the only glimmer being the retail trade figure balanced against the household spending. 104.30 remains the topside offer level that would need to break to open further gains however, it has for the moment become a sticking point that really needs strong impetus to push it through, before a long weekend in the US? Doubtful, but worse things happen at sea; through the level offers are patchy and mixed with strong resistance coming into the market as the market moves towards the 104.80-105.00 levels and probably a replication of the movement around the 104.00 levels. To the downside continually real money buying has support the market for a couple of weeks now, whether the same level of outward investment continues is anyone guess however, it’s likely that a strong move through 103.60-50 would trigger stops and a move back to the 103.20-40 areas with less support one would suspect.
• AUD: The Oz was dead in the water and one suspects that the market had already wrapped up for the weekend as soon as they came into the office given the movement, in what has to be one of the narrowest ranges for a long time. Opening around the 0.9356 areas the market dipped to the 0.9347 level and that is the range with very little going on in the market, even the carry trade and AUDNZD were limited over the course of the day. Topside offers run from the 0.9370 levels and into 94 cent, through the level one suspects top pickers might appear for the range play with stops not in numbers until above 0.9410 likely, the downside has now found a light support areas of 0.9340-30 being untested over the past 36hrs or so, through the level weak stops will likely show however, it will be light and the market becomes more mixed and congested to 0.9280.

Overnight News

EUR:

Nowotny Hints at ECB Cutting Forecast as Euro-Area Economy Lags

JPY:

Japan jobless rate edges up to 3.8% in July

Japan July Core Consumer Prices Rise 3.3% Y/y; Est. +3.3%

Japan Jul Indus Output +0.2% on Mo; Mkt Expected +1.2%

Japan July household spending falls 5.9% vs year ago

Japan Jul Overall Retail Sales +0.5% on Year

Japan’s Defence Ministry to Seek Record Budget in Fiscal 2015

Ishiba Says Will Comply with Abe’s Decision on Cabinet Reshuffle

Japan’s FSA Submits Proposed NISA Changes to Finance Ministry

JPY/RUB:

Suga: Would Be Serious Concern if Russian Invasion into Ukraine

NZD:

N.Z. Business Confidence Drop Is ‘Reality Check,’ ANZ Says

Value of New Zealand Building Approvals Rises to Record

AUD:

Australia Home Lending to Investors Fastest Pace Since ’08

AUD/RUB:

Abbott: Whether Putin Comes to Australia an ‘Important Question’

GBP:

U.K. Aug. House Prices Up 0.1% M/m, London Unchanged: Hometrack

U.K. Aug. GfK Consumer Confidence +1 vs Est. -1

CNY/GBP:

Chinese Buying 5% of Newly Built Homes in London: Knight Frank

USD/CNY:

Obama, Xi to Hold Talks after Nov. APEC Summit in China: SCMP

USD/UAH:

Ukraine President Poroshenko to Visit White House on Sept. 18

Today’s data

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

NZD       Building Permits M/M Jul A 0.10% | P 3.50%

GBP       GfK Consumer Sentiments Aug A 1 | C -1 | P -2

JPY         Unemployment Rate Jul A 3.80% | C 3.70% | P 3.70%

JPY         Household Spending Y/Y Jul A -5.90% | C -2.70% | P -3.00%

JPY         National CPI Core Y/Y Jul A 3.30% | C 3.30% | P 3.30%

JPY         Tokyo CPI Core Y/Y Aug A 2.70% | C 2.70% | P 2.80%

JPY         Retail Trade Y/Y Jul A 0.50% | C -0.10% | P -0.60%

JPY         Industrial Production M/M (JUL P) A 0.20%| C 1.40% | P -3.30% | R -3.40%

NZD       NBNZ Business Confidence Aug A 24.4 | P 39.7

JPY         Housing Starts Y/Y Jul A -14.1% | C -10.50% | P -9.50%

07:00     CHF        KOF Leading Indicator Aug C 97.9 | P 98.1

09:00     EUR        Eurozone Unemployment Rate Jul C 11.50% | P 11.50%

09:00     EUR        Eurozone CPI Estimate Y/Y Aug C 0.30% | P 0.40%

09:00     EUR        Eurozone CPI – Core Y/Y Aug (A) C 0.80% | P 0.80%

12:30     CAD       GDP M/M Jun C 0.30% | P 0.40%

12:30     CAD       Industrial Product Price M/M Jul C 0.20% | P -0.10%

12:30     CAD       Raw Materials Price Index M/M Jul C 0.70% | P 1.10%

12:30     USD       Personal Income Jul C 0.30% | P 0.40%

12:30     USD       Personal Spending Jul C 0.20% | P 0.40%

12:30     USD       PCE Deflator M/M Jul P 0.20%

12:30     USD       PCE Deflator Y/Y Jul P 1.60%

12:30     USD       PCE Core M/M Jul P 0.10%

12:30     USD       PCE Core Y/Y Jul P 1.50%

13:45     USD       Chicago PMI Aug C 56.3 | P 52.6

13:55     USD       U. of Michigan Confidence Aug (F) C 80.4 | P 79.2

Harry Hindsight

• EUR: Covering of long USD’s was the name of the game  in the Asian session, with the Euro opening just below the 1.3195 level the market held quietly, dipping in Sydney to just below 1.3190 before rallying strongly from the Tokyo opening to the 1.3210 levels and more sedately above the 1.3215 levels and holding for the balance of the session and into the grey hours. Light selling from early Europeans saw the market moving back to the 1.3200 levels before a quick move to attempt the 1.3220 levels into the London open. Early numbers did little for the market and only the confidence numbers turned the market lower chasing it down through the 1.3200 area to slow around the 1.3175 levels, the market then held in a tight range until an improvement in the US GDP number again sent the market to 1.3160 levels and make the lows for the day in what ended up being a reasonably quiet day. With tensions beginning to escalate in the Ukraine again with medium term players taking back shorts over the course of the session in front of Friday’s flash CPI figures.
• GBP: While the Cable remained in a reasonably tight range the market saw a choppy day, moving from the opening 1.6575 levels in Sydney to reach 1.6595, the market took its time to move through the 1.6600 levels before drifting back off into the official London open. Uninspiring Eurozone confidence numbers had the Euro moving lower and initially this sparked EURGBP selling with the Cable quickly rising through to just below 1.6615 before being dragged lower with the Euro, as the EURGBP made the 0.7940 level the cross found sufficient support to reverse the GBP gains and the Cable bounced along into the NYK session moving back and forth between 1.6570-1.6600 areas before finishing the day slightly higher against both the USD and Euro.
• JPY: Early Asia sent the USD lower as the long weekend put traders off holding their long positions, and you can’t blame them in the current climate in the Ukraine, Middle East. The market moved to a high of 103.90 as early Sydney day traders bought the USD in expectations to a repeat of previous days of buying early in Asia, this time however, the buying didn’t materialize and the selling appeared almost as soon as Tokyo opened, nothing too strong and the market did see the buying but the selling slowly pushed through those buyers as USD positions were shaved. USDJPY ended up holding around the 103.70 lows for much of the session barely able to move back above the 103.80 level, the move into London saw strong EURJPY selling after the Eurozone numbers and the USDJPY leg fell to below the 103.60 to set the lows for the day before slowly recovering back to the 103.75-80 levels with only a brief spike higher during the release of the US numbers. The market tailed off in later trading as interest waned into the NYK session before finishing around those 103.70’s.
• AUD: The Oz made headway into the Asian session with Private Capital number showing good gains against the background of a unimpressive set of Capex numbers the only highlight however, added to the general USD selling backdrop the market moved higher from the 0.9335 opening levels to test to the 0.9373 in a reasonably sharp move before drifting back to around the 0.9355 level and a quiet move into the London session. EURAUD selling on Eurozone confidence numbers again sparked interest and the high was extended by a pip or so before starting a quick drop back catching some of the day traders long and wrong, the market held above the 0.9340 area and the light support level remained intact moving into the NYK session, the late session held quietly in a tight range slowly moving to the 0.9355/60 areas for the close.

Yesterday’s premiership results

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%

EUR        German Unemployment Change Aug A 2K | C -6K | P -12K | R 12K

EUR        Eurozone M3 Y/Y Jul A 1.80% | C 1.50% | P 1.50%

EUR        Eurozone Economic Confidence Aug A 100.6 | C 101.5 | P 102.2

EUR        Eurozone Industrial Confidence Aug A -5.3 | C -4.5 | P -3.8

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

EUR        Eurozone Services Confidence Aug A 3.1 | C 3.5 | P 3.6

EUR        Eurozone Business Climate Indicator Aug A 0.16 | C 0.1 | P 0.17

GBP       CBI Reported Sales Aug A 37 | C 25 | P 21

EUR        German CPI M/M Aug (P) A 0.00% | C 0.00% | P 0.30%

EUR        German CPI Y/Y Aug (P) A 0.80% | C 0.80% | P 0.80%

USD       GDP (Annualized) Q2 (S) A 4.20% | C 3.90% | P 4.00%

USD       GDP Price Index Q2 (S) A 2.10% | C 2.00% | P 2.00%

USD       Initial Jobless Claims (AUG 23) A 298K | C 299K | P 298K | R 299K

USD       Pending Home Sales M/M Jul A 3.30% | C 0.60% | P -1.10% | R -1.30%

Good Luck,

Andy