Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 104.795 | EURUSD 1.31504 | EURJPY 137.809 | AUDUSD 0.93463 | NZDUSD 0.83243 | USDCAD 1.08877 | EURCHF 1.20676 | USDCHF 0.91765 | GBPUSD 1.64611 | EURGBP 0.79883 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               104.95 | 104.76

EUR/USD             1.3154 | 1.3143

EUR/JPY               137.965 | 137.75

AUD/USD            0.9367 | 0.9337

NZD/USD             0.8329 | 0.8315

USD/CAD             1.0898 | 1.0887

EUR/CHF              1.2070 | 1.2066

USD/CHF             0.9181 | 0.9176

GBP/USD             1.6465 | 1.6455

EUR/GBP             0.7990 | 0.79865

 

For today

  • EUR: The market traded in a narrow range for the day, trading for the most part in a 10 pip range 1.3144-54 with the early highs made before the Tokyo market entered the market with Sydney following the rise from the lows yesterday. The move into Tokyo saw steady selling in the EURJPY cross forcing the Euro down to its lows into the mid-session however it was quiet as the market looks for fresh input likely today. To be honest I’m not a Europhile so have a biased opinion and always suspect inaction is to be expected from the ECB however, if they were to act the market to the downside looks reasonably better bid and the market will need to break through those barriers around the 1.3110-1.3090 before the market gives way to some medium sized stops and an open door to the 1.2800 lows from last year, although even then its not plain sailing and patches of support appear around the 1.3000 level and suspected option barriers in play again. Topside offers now make an appearance from around the 1.3160 level through to weak stops above 1.3180 with further offers around 1.3200 from very weak longs one suspects. A push through the 1.3220-30 area opens up a larger move to 1.3300 closing the gap on the chart from late August and the market will be moving quickly and likely to test quickly through the level.
  • GBP: Cable traded sideways for the bulk of the session moving around the 1.6460 levels in a very uneventful session for the pair, with today’s BoE decision and purchase target unlikely to change for the month the movement is more likely to be linked to the ECB’s lead off. Light bids were sufficient yesterday to hold the market around the 1.6440 levels, although EURGBP was able to climb from the 0.7910 area and GBP suffering from the spill over that’s likely to continue until the Scottish referendum is over with one way or the other. Those bids to the downside protect a move through to with the next big figure 1.6300 open with less congestion to the lower side of 1.6200, topside has patches of offers every 50 pips on the sentimental areas with better offers around the 1.6600 however, as can be seen the topside is the weak point for the moment and while you may see strong selling from real money, funds and everyone else clearing out long positions built on good numbers the fact a yes vote in Scotland still worries the market.
  • JPY: Well the story was yesterday that the market didn’t like some of the selections for the new cabinet however, saying that the move lower was tempered by continuing yield followers and the market found good support entering the market all the way down, today was little different, while it was quieter the same type of buying entered the market from the opening 104.85 areas into Tokyo and pushed the USDJPY to just short of 104.95 before giving up a little to move towards the lows from yesterday before a slow climb back to the starting areas. The BoJ monetary policy statement was little changed and had very little impact on the market, with the commentary really only stating the obvious. For the moment the downside has bids coming to market as calls are triggered in the market with only portions left resting in the market. 104.70-50 holds the best bids for the moment and although from there to 104.30 is a little light good bids remain around the break up area from a couple of days ago and will likely slow any descent, a break through the 103.80 areas will trigger light stops. Topside offers from above the 105.00 level have been thinned out however, the market failed at the 105.30 areas and that remains the key for the next leg up and a strong push through the 105.30 will likely see break out buyers pushing for the 106.00 levels, if the market is stimulated by the ECB.
  • AUD: The Oz is back to the 0.9340 levels and has briefly pushed through the 0.9360 levels during the session however, remained fairly quiet in front of the ECB, EURAUD cross rests on support areas and a push through to the downside will give the Oz possibly enough room to move through the 0.9380 level to push into the Jul ranges however, nothing is a given and the Euro dropping is just as likely to take the Oz with it. Chatter of dividend related buying through from yesterday is less likely to be repeated today. The topside offers into the 94 cent level are followed by only light stops and further interest to sell all the way to 95 cents and will slow any ascent unless the downside EURAUD cross is littered with strong stops. Downside sees the market open to around the 0.9240 levels with the market cleared out so recently leaving those bids vulnerable against both the USD and EUR over the coming ECB and NFP numbers.

Overnight News

JPY:

Shiozaki: Japan to Reform Both GPIF Investment and Governance

Shiozaki Says Japan GPIF Can Invest in Start Ups, Nikkei Reports

Japan’s First Lady speaks out ahead of sales tax decision

Bank of Japan Stands Pat on Policy

Japanese Bought Net 503.7 Billion Yen Overseas Debt Last Week

NZD:

New Zealand House-Price Inflation Is Slowest in 17 Months

GBP:

U.K. 2015 Election May Be Delayed If Scots Vote Yes: Guardian

U.K. Recovery Strong, Though Momentum Will Ease, CBI Says

 

Today’s data

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

AUD       Trade Balance (AUD) Jul A -1.36B | C -1.77B | P -1.68B | R -1.56B

AUD       Retail Sales M/M Jul A 0.40% | C 0.40% | P 0.60%

EUR        German Factory Orders M/M Jul A 4.60% | C 1.60% | P -3.20% | R -2.70%

08:10     EUR        Eurozone Retail PMI Aug P 47.6

11:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

11:00     GBP       BOE Asset Purchase Target C 375B | P 375B

11:30     USD       Challenger Job Cuts Y/Y Aug P 24.40%

11:45     EUR        ECB Rate Decision C 0.15% | P 0.15%

12:15     USD       ADP Employment Change Aug C 210K | P 218K

12:30     EUR        ECB Press Conference

12:30     CAD       Trade Balance (CAD) Jul C 0.9B | P 1.86B

12:30     USD       Trade Balance Jul C -$42.5B | P -$41.5B

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

12:30     USD       Non-Farm Productivity Q2 (F) C 2.50% | P 2.50%

12:30     USD       Unit Labour Costs Q2 (F) C 0.60% | P 0.60%

14:00     USD       ISM Non-Manufacturing Composite Aug C 57 | P 58.7

15:00     USD       Crude Oil Inventories P -2.1M

 

Harry Hindsight

  • EUR: The Euro held early in the session around the 1.3130-35 levels before dipping a little into the low 1.3120’s, a strong period of Cable selling dragged on the Euro into the grey hours. The market started to recovery as news of a potential ceasefire in the Ukraine appeared in the market and like days of old when the DEM (Deutsche Mark) would react to tensions with the Soviet block so the Euro rose even if only a little, pushing through the light offers the 1.3160 before running into the NYK session and the USD reasserting itself on the market to force the Euro down to the earlier holding levels around 1.3135. The run to the close was a steady grind higher pushing back to the 1.3150 levels as the market in the face of falling retail sales and PMI services missing consensus.
  • GBP: Cable moved quietly through the early part of the session dropping in the run to the grey hours as a suspected single ticket selling entered the market dropping from the opening and holding 1.6470 levels to the mid-1.6440. From the grey hours onwards the market started a steady recovery. The market continued rising through the early part of the session with a strong Services PMI helping to underpin the buying through to early NYK when the USD re-establishing its strength with different factors not quiet outweighing the Scottish referendum, the market eventually dipped to fresh lows around the 1.6440 area before rising as far as the 1.6460’s into the close several hours later.
  • JPY: Over extension, lessening geopolitical tensions in one theatre saw the USDJPY move from just above the 105.30 level and into the grey hours down through the opening 105.10 and weak stops through 105.00 to initially penetrate 104.95, the bounce with slight and short lived before touching through 104.90 this time and the London opening, recovering slightly and pushing back through the 105.10 level the market struggled from that level and 104.90, the market eventually gave up the topside move and the market drifted lower from that point on touching the 104.75 levels late in the NYK session barely recovering 5 pips from the lows in the close.
  • AUD: Comments from RBA’s Stevens and figures had the markets moving one way and then the other during a brief period during the Asian session, quickly setting a range above 93 cent and down to below 0.9265 before holding steady around the 0.9270 levels and then a move into the grey hours. Although the market in the Oz didn’t really start to rise until the London opening the fall back of the USDJPY did allow space for the topside Oz and London bought into the market moving it to above the 0.9330 level again from the lows and holding the area in the run to NYK. NYK was a light buyer from the opening taking the market to the 0.9340-50 levels and that is where the market remained into the close in a quiet session for the Oz.

Yesterday’s premiership results

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

EUR        Eurozone Services PMI Aug (F) A 53.1 | C 53.5 | P 53.5

GBP       Services PMI Aug A 60.5 | C 58.6 | P 59.1

EUR        Eurozone Retail Sales M/M Jul A -0.40% | C -0.30% | P 0.40% | R 0.30%

CAD       BoC Rate Decision A 1.00% | C 1.00% | P 1.00%

USD       Factory Orders Jul A 10.50% | C 10.90% | P 1.10%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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