Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 105.086 105.00-05 | EURUSD 1.2951 1.2940-50 | EURJPY 136.105 135.665-1.36335 | AUDUSD 0.9377 0.9365-85 | NZDUSD 0.83283 0.8315-30 | USDCAD 1.08825 1.0875-88 | EURCHF 1.20602 1.2060-635 | USDCHF 0.93113 0.93055-24 | GBPUSD 1.63273 1.6188-95 | EURGBP 0.79329 0.79905-99 |


Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               105.24 | 104.865

EUR/USD             1.2963 | 1.2930

EUR/JPY               136.32 | 135.82

AUD/USD            0.9383 | 0.9361

NZD/USD             0.8329 | 0.8305

USD/CAD             1.0898 | 1.0881

EUR/CHF              1.2067 | 1.2058

USD/CHF             0.9330 | 0.93095

GBP/USD             1.6270 | 1.6165

EUR/GBP             0.8017 | 0.7935


For today

  • EUR: The Euro opened broadly in line with Friday’s close opening around the 1.2955 levels before slipping slightly back and holding around the 1.2950 levels for a good portion of the session. Selling in the cross EURGBP later in the session with Cable holding above the 1.6210 areas forced the Euro a little lower testing into the 1.2940’s. Talk of harsher sanctions against Russia again highlighted to the market the two way risk this would involve especially with Europe’s reliance on energy products. Light bids below the 1.2930 area and into the 1.2900 with suspected option barriers in that area with a mixture to the next supportive area 1.2850-70 and then patches from then until 1.2820 areas.  Topside offers begin towards the 1.3000 level with nothing immensely strong but for the moment sufficient to hold the market in place. Through the 1.3000 levels sees potential of a short squeeze however, the chance has been there through Friday and all though the US numbers were poor the Euro’s didn’t move in that direction.
  • GBP: The movement of the day or one should say the opening of the day, with the Sunday Times reporting on a YouGov poll giving the Yes vote a 2 point lead at 51% to 49%, the market ran with this news and the market opened around the 1.6180 in the pre-market dropping to 1.6166-70 before recovering towards the official opening and then repeating the move a second time before our opening started around the 1.6180 levels. The market steadily rose in the first hour as the market started to recover after the low opening trading to the 1.6220 with model and leveraged names seen as better buyers before holding for several hours above those levels before starting a drift late into the session as profit taking from day trading kicked in. The pre-opening saw some large flows going through as stops and margins were hit however, the general consensus in the market was limited, and it has to be pointed out that the spread betting market still has a big difference between the no and yes vote in favour of No.  Bids to the downside through the 1.6160 levels and into the 1.6140 area before giving way to light weak stops, sentimental levels then take over and some protection around the 1.6100 areas however, we saw how well that works on the 1.6200 level today. Topside movement was limited with light offers above the 1.6220 areas and into 1.6230.
  • JPY: Weakness in the other majors allowed the USDJPY to rise from the opening below the 105.05-10 area to push initially above the 105.20 areas before drifting lower as the EURJPY contract made a move through the 136.00 late into the session. Although the US numbers were less than impressive the USDJPY has continued to hold up well even though GDP today was in line with expectations. The USDJPY has bids to the downside from the 104.70-50 levels and still the yield players buy into any dip in the market. Through there the market is likely to see some weak stops and given the move in Cable leveraged accounts could be close to the market margin wise. Topside offers from the 105.20 are light and the market has bits and pieces to the 105.30 levels before an opening to the 105.70 and stronger offers from there into the 106.00 and a little through to around the 106.20 levels.
  • AUD: The Oz opened a little lower whether this was connected to the GBP opening remains to be seen however, the market for the moment seems to be stuck with nervousness to the topside and an unwillingness to sell it. Bids are patchy over 20 pips before the market thickens up a little around the 0.9335 areas before weak stops make an appearance. Light bids through the 93 cents before the market starts to open up through to 0.9280 and some better bids. Topside offers remain strong into the 94 cents and through to 0.9420 and 0.9450 areas.

Overnight News


China Posts Record Surplus as Exports-Imports Diverge

China Says Respect Needed on South China Sea Issues: Wang

China Decision on H.K. Election Rules Credit Negative: Moody’s


IMF’s Lagarde Doesn’t See Euro as Overvalued Vs Dollar: Echos

Germany, France to Present Joint Investment Paper: Handelsblatt


Japan’s Economy Contracts More Than Initial Estimate on Tax

Japan’s July Current-Account Surplus Drops to 416.7b Yen

Japan Investors Buy Most U.K., Aussie Debt Since ’11; Sell Bunds


Japan Protests Suspected Chinese Marine Survey in EEZ: Kyodo


Russia May Resort to Asymmetric Sanctions, PM Says: Vedomosti

Russia Ready to Support Rosneft Output, Medvedev Says: Vedomosti


N.Z.’s English Says He Would Start Cutting Taxes in 2017


N.Z. Manufacturing Volumes Led Lower by Meat, Dairy


N.Z. Statistics Staff Plan Strike as Pay Talks Fail, Union Says


Australia Aug. ANZ Job Ads Rise 1.5% vs 0.5% in July



Today’s data

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

NZD       Manufacturing Activity Q2 A -1.90% | P 0.60% | R 0.00%

JPY         Current Account (JPY) Jul A 0.10T | C 0.18T | P 0.13T

JPY         GDP Q/Q Q2 (F) A -1.80% | C -1.80% | P -1.70%

JPY         GDP Deflator Y/Y Q2 (F) A 2.00% | C 2.00% | P 2.00%

CNY        Trade Balance Aug A $49.80B | C $40.00B | P $47.30B

JPY         Eco Watchers Survey: Current Aug A 47.4 | C 51 | P 51.3

05:45     CHF        Unemployment Rate Aug C 3.20% | P 3.20%

06:00     EUR        German Trade Balance (EUR) Jul C 17.3B | P 16.2B

07:15     CHF        CPI M/M Aug C -0.10% | P -0.40%

07:15     CHF        CPI Y/Y Aug C 0.00% | P 0.00%

08:30     EUR        Eurozone Sentix Investor Confidence Sep C 1.4 | P 2.7

12:30     CAD       Building Permits M/M Jul C -5.00% | P 13.50%


Weekend News


Scottish Independence Poll Puts Separatists Ahead for First Time
U.K.’s Osborne Says ‘Scotland Faces a Very Big Choice’
Osborne: U.K. Has Action Plan to Give More Power to Scotland
U.K.’s Osborne Says ‘There Will Not Be a Currency Union’
Cameron Warns of Terrorist Threat If Scotland Backs Independence
U.K.’s Osborne Says Threats Like ISIS Need to Be Destroyed
Darling Says Poll Result ‘Must Now Serve as a Wake-Up Call’: PA

Plosser Says Keeping Rates Low ‘Risky’ as Labour Market Heals

Plosser Says Discussion of Statement Language ‘On the Table’

Rakuten in Talks to Buy U.S. Shopping Website Operator Ebates

EU Completes Plan to Broaden Economic Sanctions on Russia

ECB Shouldn’t Wait to Act If Required, Visco Tells Repubblica
ECB Monetary Policy Already `Stretched Very Far’: Dijsselbloem

Ukraine Truce Turns Tenuous as Mariupol Attacks Follow Lull

EU Sees Fundamental Divergences With U.S. on Financial Oversight

China Publishes New Rules on Companies Investing Overseas

China, Japan, S.Korea Diplomats to Meet This Month in Seoul

India to Buy Australian Uranium as Cooperation Treaty Signed


Harry Hindsight

  • EUR: After a busy day the market was unable to find any momentum to reclaim some of the losses during the previous session and held in Asia below the 1.2940 area through the Asian session. The move into London started to see light buying however, with NFP to come even that was limited with early London only able to push to the 1.2960 areas into NYK. Early German data helped the market ease a little higher however, the Eurozone GDP came in precisely as expected with no rise and the market more or less ignored it to head into edging above the 1.2960. The release of the NFP number was well below expectations however the market took the numbers in its stride and ignored the worst number for several months spiking to above the 1.2990 and into light offers and that was that, it spent the next 2 or 3 hours holding around the 1.2970-80 areas before heading into the weekend close drifting a little to finish below the 1.2960 levels after a disappointing day.
  • GBP: With the Cable less affected by the Euro demise it opening around the 1.6320 levels and although the market took a little dive in the Asian session with more a squaring of positions before the weekend than anything else moved back above the 1.6300 levels into the London opening having traded to around the 1.6290 areas. The move towards NYK saw the market trading around the 1.6320 levels with little news to move the GBP in particular before position cutting reappeared before the NFP were released sending the GBP through the previous low and into the mid 1.6280’s. The NFP sent the Cable hack higher with a weaker than expected number to push to the 1.6340 levels before again drifting in the late session to finish the day around the 1.6330 areas. The fact that the NFP allows the FED a little more room for the moment on moving interest rates would normally have weakened the USD somewhat however, the market seems comfortable with long USD’s for the moment it would seem.
  • JPY: The USDJPY saw strong buying going through from the opening in Sydney moving from the 105.10 areas to test new highs not seen since the beginning of the year, with the market moving into the Tokyo session pushing up through the exhausted offers around the 105.30-40 area and moving quickly to above 105.70. Having peaked during the Tokyo fix the market then spent the rest of the session drifting back to the 105.30 areas where the market broke out from. The move into the London session saw the 105.30 areas give way as some of the medium term types took profit on the failure to test higher and hold, drifting down towards the opening levels as the market approached the NFP numbers. The release of a weaker number sent the market dipping through lower pushing through the 104.80 in a quick stab lower and then moving back from a slight bounce to attempt 104.70. Once the numbers were out of the way the market slowly regained the some of the losses to the 105.00 levels before holding for several hours just above into the close.
  • AUD: After a quiet Asian session which saw the market move from the 0.9345 areas to test the support around the 0.9330 level the market started to edge quietly higher in the London session pushing towards the 0.9370 levels prior to the NFP release. On the release the USD dropped back against the Oz and it was able to quickly move higher pushing for the first time in over a month to above the 94 cent level. The market did attempt the move however, the market struggled each time at the level before dropping back to the 0.9375 level and held in the areas for several hours into the close.

Friday’s premiership results

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

JPY         Leading Index Jul (P) A 106.5 | C 107.2 | P 105.9

EUR        German Industrial Production M/M Jul A 1.90% | C 0.50% | P 0.30% | R 0.40%

CHF        Foreign Currency Reserves Aug A 453.8B | P 453.4B

EUR        Eurozone GDP Q/Q Q2 (P) A 0.00% | C 0.00% | P 0.00%

USD       Change in Non-farm Payrolls Aug A 142K | C 216K | P 209K | R 212K

USD       Unemployment Rate Aug A 6.10% | C 6.10% | P 6.20%

CAD       Net Change in Employment Aug A -11K | C 10.3K | P 41.7K

CAD       Unemployment Rate Aug A 7.00% | C 7.00% | P 7.00%

CAD       Ivey PMI Aug A 50.9 | C 55.7 | P 54.1


Stay lucky


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