Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 105.091 | EURUSD 1.31332 | EURJPY138.02 | AUDUSD 0.9275 | NZDUSD 0.83085 | USDCAD 1.09291 | EURCHF 1.20696 | USDCHF 0.91901 | GBPUSD 1.64689 | EURGBP 0.79747 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               105.31 | 104.92

EUR/USD             1.31355 | 1.31225

EUR/JPY               138.255 | 137.775

AUD/USD            0.9305 | 0.9263

NZD/USD             0.8324 | 0.8287

USD/CAD             1.0943 | 1.0923

EUR/CHF              1.20745 | 1.2065

USD/CHF             0.92005 | 0.9187

GBP/USD             1.6474 | 1.6445

EUR/GBP             0.7979 | 0.79715

 

For today

  • EUR: The Euro remained steady for the early part of the session holding around the 1.3130 levels before dipping lower in mid flow as strong selling moved into the market as Cable moved lower and EURGBP rallied a little higher as the Euro held the 1.3120 levels before quietly moving towards the London session. The market still has bids from the 1.3110 area and into the figure before opening up the downside through the 1.3080 levels. Topside likely has offers around the 1.3140-50 areas with weak stops behind the levels before rising into further offers towards the 1.3180 areas and into 1.3200.
  • GBP: Through the early part of the session the market remained static around the 1.6470 areas before dropping through the 1.6460 levels and triggering light stops on what is believed to be a large ticket going through the market, since then the market has held around the 1.6460 levels as we head towards the London session. Bids into the 1.6400 levels from which is where the market was at the beginning of the year and congested a little around the area and those bids are likely to be mixed as breakout players appear in the market. The topside is now open with the clear out from the 1.6600 to current levels and likely to be lightly defended with offers around the sentimental areas only and weak stops through the 1.6500 levels.
  • JPY: The USDJPY slowly continued its rise pushing through the 105.20 area however, apart from a brief peak above the 105.30 levels the offers continued to hold the market in place with plenty of two way flow all the way through, as the market moved into the grey hours the release of the new Japanese Cabinet sent the market quickly to below the 105.00 levels. For the moment as with yesterday’s move 30 seems to be the key area with offers still around that 105.30 area and continuing towards the yearly highs around the 105.50 once through there break out stops are likely and a clear run towards new highs and the 106.00 area. With leveraged accounts and real money buyers rather than the flow to yield we’ve seen over the past few weeks and the usual suspicion of exporters on the offer. The downside is open to the 104.20 areas one would having risen through the offers, with only the likelihood of yield buyers appearing anywhere in between the current levels and that supportive area. Even through the level the market still holds bids and stops are not likely until deep below those levels around the 103.80 area.
  • AUD: The Oz broadly held its levels seeing some choppy movement around the GDP and China numbers and RBA’s Stevens on the wire the range was inflated somewhat but focusing around the 0.9280 levels. Bids to the downside around the 0.9270-60 areas before light stops appear, through the level more bids are likely into the 0.9240 lows from last month and June. A move through the 92 cent level will likely see strong stops opening the market for a move lower into the 90 cents handle however, that for the moment is for another day.

 

Overnight News

JPY:

Pro-GPIF Reformer Shiozaki Named Health Min. in Japan Reshuffle

JPY: Tanigaki: Basically Should Raise Sales Tax in Line With Law

JPY: Japan Has Escaped Deflation, Finance Minister Aso Says

JPY: Japan Aug. Services PMI 49.9 vs 50.4 in July

AUD:

Australia economy slows in Q2, still beats forecasts – RTRS

AUD: Stevens Says Unwilling to Boost Housing More to Cut Jobless Rate

AUD: Australia Aug. Services Index Rises 0.1 Pt to 49.4

AUD/RUB:

Abbott: Considering Military Capacity-Building Aid for Ukraine

CNY:

China Aug. Non-Manufacturing PMI at 54.4; July 54.2

HSBC China Aug. Services PMI 54.1 vs 50 in July

Shanghai FTZ May Extend Free Trade Accounts to Foreign Banks

GBP:

U.K. Aug. BRC Shop Price Index -1.6% Y/y vs July -1.9% Y/y

 

Today’s data

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

GBP       BRC Shop Price Index Y/Y Aug A -1.60% | P -1.90%

CNY        Non-manufacturing PMI Aug A 54.4 | P 54.2

AUD       GDP Q/Q Q2 A 0.50% | C 0.40% | P 1.10%

CNY        HSBC China Services PMI Aug A 54.1 | P 50

08:00     EUR        Eurozone Services PMI Aug (F) C 53.5 | P 53.5

08:30     GBP       Services PMI Aug C 58.6 | P 59.1

09:00     EUR        Eurozone Retail Sales M/M Jul C -0.30% | P 0.40%

14:00     CAD       BoC Rate Decision C 1.00% | P 1.00%

14:00     USD       Factory Orders Jul C 10.90% | P 1.10%

18:00     USD       Fed’s Beige Book Report

 

Harry Hindsight

  • EUR: The Euro traded in a tight range over the day, moving from the 1.3128 level opening, ticking slightly higher to the 1.3133 in early trading before settling back down through the 1.3120 area in the mid Asian session, before starting a recovery into the London opening and trading to the day’s high of 1.3136. With the Eurozone numbers coming in as expected the market dipped back through the lows to touch just below the 1.3112 levels. The rest of the session was a slow move back towards the 1.3130 levels in slow trading with the market uninspired.
  • GBP: Cable spent the day retreating from the opening above the 1.6610 areas, dropping initially to the 1.6580 levels as the USD rallied against most currencies. The market quietly traded around the levels into the London session. The market pushed lower again ignoring the PMI numbers and concentrating on the forth coming referendum on Scottish independence and recent polls showing the Yes vote gaining ground. With the added pressure of a strong USD the Cable dropped steadily over the course of the day pushing through the 1.6500 levels and plenty of two way flow going through to trade to the 1.6480 levels and into the range from the beginning of the year.
    JPY:
  • Having broken through the 104.30 areas the market rose quickly to 104.70 before slowing as it ran into the offers on the topside. The market ground steadily through to the 105.00 levels in the London session and only once the market moved into the NYK session did it truly break through to the 105.10-20 levels and again the two way flows matching off into the close.
  • AUD: With the rise of the USDJPY the Oz was forced lower as profit taking in the carry trade kicked in, an unchanged RBA announcement did little to cheer the market and from the opening 0.9330 levels the market moved to the 0.9315 levels before slowly trading lower to hold along the 0.9285 levels into London. While the market halted its slide during the early part of the London session the fact the market was unable to move to far back through the 0.9300 level saw the market again on the back foot as the day traders lost patience and reversed their positions as the market moved to the 0.9270 levels and spent the remainder of the session in NYK stuck around the 0.9275 levels as the USDJPY also stalled on its highs.

 

Yesterday’s premiership results

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% | R 1.00%

AUD       Current Account Balance (AUD) Q2 A -13.7B | C -13.8B | P -5.7B | R -7.8B

AUD       Building Approvals M/M Jul A 2.50% | C 1.70% | P -5.00% | R -3.80%

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

CHF        GDP Q/Q Q2 A 0.00% | C 0.50% | P 0.50%

GBP       Construction PMI Aug A 64 | C 61.5 | P 62.4

EUR        Eurozone PPI M/M Jul A -0.10% | C -0.10% | P 0.10%

EUR        Eurozone PPI Y/Y Jul A -1.10% | C -1.10% | P -0.80%

USD       ISM Manufacturing Aug A 59 | C 56.8 | P 57.1

USD       ISM Prices Paid Aug A 58 | C 59 | P 59.5

USD       Construction Spending M/M Jul A 1.80% | C 0.90% | P -1.80% | R -0.90%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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