Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 104.348 | EURUSD 1.31286 | EURJPY 136.992 | AUDUSD 0.93329 | NZDUSD 0.83781 | USDCAD 1.08706 | EURCHF 1.20729 | USDCHF 0.91956 | GBPUSD 1.66085 | EURGBP 0.7905 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               104.87 | 104.3

EUR/USD             1.3133 | 1.3115

EUR/JPY               137.54 | 136.945

AUD/USD            0.9338 | 0.9285

NZD/USD             0.8391 | 0.8342

USD/CAD             1.0903 | 1.0868

EUR/CHF              1.20765 | 1.20715

USD/CHF             0.92065 | 0.91925

GBP/USD             1.6615 | 1.6577

EUR/GBP             0.79135 | 0.79025

 

For today

  • EUR: The Euro was gradually weakened against the USD as the USDJPY rallied higher, pushing lightly through the 1.3120’s dipping to the 1.3115 levels for a fresh low for the year. A push through the 1.3100 levels will likely see a two way struggle before the downside is likely to be renewed, of course until Thursday’s rate announcement and conference. Through the level the market is likely to see some light bids around the 1.3060-80 areas however, with 1.3000 waiting the pressure lower is likely to build. Topside sees light offers through the 1.3150 levels, likely that offers become stronger into the 1.3200 levels before a breakout higher is possible, that’s if the results on Thursday fail to do anything to deflect the market, with expectations over the past few weeks looking for something concrete from the ECB.
  • GBP: Strength in the USD sent Cable lower early in the Tokyo session, with the market opening around the 1.6610 level and topping out above 1.6615 before dropping quickly down through to the 1.6580 levels. The market continues to hold those levels as it moves towards London. Downside bidding is likely around the 1.6560-40 areas which have held for a week, with weak stops through the levels. To the topside the market has the offers around the 1.6610 levels which have been tested however, I don’t believe it to have been a serious attempt and the topside is weak for a move through that level and a test of the 1.6650-70 areas.  EURGBP sees light offers on any move to the 0.7935 area and likely to keep GBP under pressure in a weak market.
  • JPY: The market moved steadily through the 104.30 level taking out the offers gradually over the previous day, the move into the Asian session saw the market steadily clearing the balance before running strongly and triggering stops on the move to above the 104.60 and although the market continued to move higher the ascent slowed and struggled on a move through the 104.80 and we have remained around the level since. With that level out of the way one wonders how long this one will take, with the 105.00 not seen since the beginning of the year the offers are likely to see more exporter offers, option plays and finally the range players standing in the way, as with the previous levels the market is likely to be stubborn for a while however, the bad news keeps rolling in, as a side note there is a defined large channel from 1998 to present day that now appears to show the USDJPY moving through the topside. Downside is likely to have weak stops through the 104.30 areas from the break out players however, the question is, are the yield players likely to continue pushing? In front of those levels however, there is likely to be some mix with stops and light bids through to that break out level.
  • AUD: Moving from the opening 0.9335 levels the market suddenly had the rug pulled from under it and rather than the general numbers that were announced the market reacted to the strength of the USDJPY and a general USD bias, the Oz dropped initially to the 0.9310 levels and then held for a an hour or so before dropping again before the RBA announcement and this time a slower more deeper move through the 93 cent level and light stops to touch the 0.9285 levels. This now leaves the topside more difficult to push through leaving the 0.9350-60 levels containing more resistance than before, through the level though the market exposes 94 cents likely with strong impetus moving higher. Downside is now open with a push through 0.9280 opening up a test of the 0.9240 areas and the previous lows for the month, and possibly a deeper move unfolding along the way.

Overnight News

JPY:

Japan’s Abe to Offer Yasuhisa Shiozaki a Cabinet Post: Kyodo

Japan Needs Sustained Recovery before Tax Rise, Abe Adviser Says

Japanese Corporates’ Capex to Slow, Cash to Rise, Moody’s Says

AUD:

Australia central bank holds rates at record low 2.5 pct

Australia’s Mining Profits Tax Repealed as Bill Passes Senate

Australia July Building Approvals Rose 2.5% M/M; Est 1.9% Gain

Australia ANZ Weekly Consumer Sentiment Falls 0.8% to 112.6

CNY:

CBRC Urges Banks to Speed up Bad-Loan Write-Offs: China Finance

JPY/KRW:

BOK Closely Monitoring Recent Decline in Yen-Won Rate: Official

NZD:

NZ First Won’t Support Key without Royal Commission on Collins

Key Says Inquiry into Collins Likely to Report After NZ Election

N.Z. Commodity Price Index Falls to 17-Month Low, ANZ Bank Says

IDR/JPY:

Widodo Seeks Loans from Japan for Infrastructure: Jakarta Post

 

Today’s data

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

JPY         Monetary Base Y/Y Aug A 40.50% | C 43.70% | P 42.70%

JPY         Labour Cash Earnings Y/Y Jul A 2.60% | C 0.90% | P 0.40%

AUD       Current Account Balance (AUD) Q2 A -13.7B | C -13.8B | P -5.7B

AUD       Building Approvals M/M Jul A 2.50% | C 1.70% | P -5.00%

AUD       RBA Rate Decision A 2.50% | C 2.50% | P 2.50%

05:45     CHF        GDP Q/Q Q2 C 0.50% | P 0.50%

08:30     GBP       Construction PMI Aug C 61.5 | P 62.4

09:00     EUR        Eurozone PPI M/M Jul C -0.10% | P 0.10%

09:00     EUR        Eurozone PPI Y/Y Jul C -1.10% | P -0.80%

14:00     USD       ISM Manufacturing Aug C 56.8 | P 57.1

14:00     USD       ISM Prices Paid Aug C 59 | P 59.5

14:00     USD       Construction Spending M/M Jul C 0.90% | P -1.80%

 

Harry Hindsight

  • EUR: A quiet day overall with the Euro drifting lower through the Asian session basing around the 1.3120 levels having dipped from the opening 1.3135 levels. The move into the grey hours and the London session proper saw the market moving steadily higher to the 1.3145 levels however, that was all she wrote as the market held quietly through the remainder of the session slowly drifting back into the 1.3130’s and a quiet close with the US away for Labour day.
  • GBP: The Cable opened a little short of Friday’s close trading slowly higher through the Asian session with little interest in GBP. Early London started buying fairly strongly with light stops taken out through the 1.6610 levels and the market moved to 1.6630 levels before holding and then attempting the topside again, even when the release of the PMI number came in on the soft side the markets move was only back to the 1.6610 levels from the 1.6643/44 area before holding and trading sideways over the rest of the session, the market eventually drifted into the 1.6610 level for a quiet close.
  • JPY: While USDJPY opened around the 104.20 areas the market struggled to gain much over the Asian session, holding just below the level for most of the session. The move into the London session saw the USDJPY pushing slightly higher and into the 104.30 levels, the market gradually pushed through the level and although there was no fire works the two way flow was reasonable given the bank holiday in the US finishing above the 104.30’s.
  • AUD: As the USDJPY opened slightly higher the Oz opened slightly lower as the AUDJPY carry trade opened in line with Friday’s close. Recovering from the 0.9325 levels the market steadily filled the gap on the charts and moved steadily back to the 0.9345 levels, the move towards London saw the market test further North and slightly through the 0.9350 levels before the market drifted off over the remainder of the session dipping through 0.9340 and holding the areas before the end of the London session and then dropping to hold the 0.9330-35 levels into the close.

Yesterday’s premiership results

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

NZD       Terms of Trade Index Q/Q Q2 A 0.30% | C -3.50% | P 1.80%

JPY         Capital Spending Q2 A 3.00% | C 3.80% | P 7.40%

AUD       TD Securities Inflation M/M Aug A 0.00% | P 0.20%

CNY        Manufacturing PMI Aug A 51.1 | C 51.3 | P 51.7

CNY        HSBC Manufacturing PMI Aug (F) A 50.2 | C 50.5 | P 50.3

EUR        German GDP Q/Q Q2 (F) A -0.20% | C -0.20% | P -0.20%

CHF        SVME PMI Aug A 52.9 | C 53.8 | P 54.3

EUR        Eurozone Manufacturing PMI Aug (F) A 50.7 | C 50.8 | P 50.8

GBP       Mortgage Approvals Jul A 67K | C 66K | P 67.2K

GBP       M4 Money Supply M/M Jul A 0.30% | C 0.50% | P 0.10%

GBP       PMI Manufacturing Aug A 52.5 | C 55.1 | P 55.4 | R 54.8

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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