Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 106.854 | EURUSD 1.2917 | EURJPY 138.024 | AUDUSD 0.91562 | NZDUSD 0.82286 | USDCAD 1.09368 | EURCHF 1.20993 | USDCHF 0.93671 | GBPUSD 1.6212 | EURGBP 0.79675 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               107.02 | 106.64

EUR/USD             1.2925 | 1.2902

EUR/JPY               138.12 | 137.74

AUD/USD            0.9218 | 0.9138

NZD/USD             0.8221 | 0.8180

USD/CAD             1.0969 | 1.0935

EUR/CHF              1.2109 | 1.2095

USD/CHF             0.93765 | 0.93605

GBP/USD             1.6220 | 1.6187

EUR/GBP             0.7976 | 0.79655

For today

• EUR: The Euro’s opened around the 1.2515 levels before heading towards the highs around the 1.2925 levels and the market seemed to be set for a steady rise that was of course before AUD numbers put a spike into the EURAUD buyer’s balloon from yesterday. There reversing of course in the pair forced the Euro lower as the market in the Oz pushed higher. Euro’s pushed from the highs steadily down to below the 1.2910 level as the EURAUD cross dropped quickly from above the 1.4100 levels to below 1.4020 in a quick. For the moment the market holds above the 1.2900 levels as we move towards the grey hours. Light offers from the 1.2925 levels before opening up through 1.2935 levels and stronger offers around the 1.2960 levels, stops are likely to be building through the 1.3000 area. Downside sees light bids around 1.2900 area with stronger levels through to 1.2880 to 1.2860. Down below 1.2860 opens up a likely test through the 1.2800 areas.
• GBP: Cable held its own broadly with the market opening just above the 1.6200 level and rising to just short of the 1.6220 levels before drifting with the move lower in the Euro to test back below the 1.6200 level, EURGBP drifted only a few pips lower holding just below the 0.7970’s, Cable recovered a little to the 1.6200 areas as the market moves to the grey hours. The resistance levels at the highs will open up a move back to the 1.6320 drop off point from Sunday/Monday, Downside bids are light through the 1.6160 levels however, the market begins to stiffen as it moves through 1.6140 and into the 1.6100 level even through the levels 1.6060 would have to break to set up any further downside and even that is limited. Of course everything hinges on the media circus surrounding the referendum in Scotland.
• JPY: USDJPY opened quietly around the 106.85 levels before slipping slightly to the 106.70 and then through there after several hours on the back of a better all industry number. Strong Oz buying helped to keep the market suppressed as the carry AUDJPY pushed quickly through the 98.00 level for the first time this year and since the market dropped back from its highs in May of last year. However, the market wasn’t finished as yield players and the market in general continued with the buying in USDJPY to push gently towards the 107.00 level and through the offers surrounding the area. 107.00-20 again holds offers however, these are beginning to thin out and are not likely to be as strong as previous 104,105 and 106 areas, and we have to go back to 2007 pre-collapse to see similar levels in USDJPY however, its possibly still not plain sailing and patches of offers connected more with option barriers stand along the way. Downside bids are likely around the 106.80 areas before giving way to light stops through the 106.60 levels and then a free ride to slightly better bids around the 106.20-00 levels. Through there will likely see margin calls impacted and leveraged selling moving into the market for a deeper move through to 105.00.
• AUD: The Oz headed into the new day around the 0.9160 level having recovered in the second half of the previous day from lows below 0.9120, after a quiet few hours a good employment number sent the market scurrying back above the 92 cent level and although the market didn’t hold too long above the level it was unable to drop back to below the 0.9180 levels in trading over the next few hours into the grey period. Of note was the quick move back through 1.4100 in EURAUD with forcing the Euro lower hitting to below 1.4020 before settling down to trade just below the 1.4060 level and negating the previous days move. 0.9220 offers the first resistance area on the topside with weak stops likely through that level and opening a move to the 0.9280 levels and stronger offers. The downside is a little open with 0.9160 the level the market moved up from and likely bids in the area remaining, even through that level the market has patches of support through to the stronger 0.9120 levels and current market thinking that what little chance of the RBA reducing interest rates to curb is receding further away.

Overnight News

AUD:

Australian Aug Employment Rose 121,000 M/M; Est. 15,000 Gain

Australia Faces Weak Nominal GDP Growth, Parkinson Says

JPY:

Kuroda: Told Abe Won’t Hesitate to Act If Price Target at Risk

BOJ Adviser Kawai Urges Abe to Proceed With Sales-Tax Increase

Japan FSA to Promote Lending to Growth Sectors, Startups: Nikkei

Japanese Bought Net 763.6 Billion Yen Overseas Debt Last Week

JPY/RUB:

Suga: Former PM Mori Met President Putin in Russia Yesterday

NZD:

RBNZ Signals Pause in Rate Hikes, Calls Kiwi Overvalued

USD:

Obama Promises Steady Push to ‘Take Out’ Islamic State

USD: Boehner: ‘Questions Remain’ on Obama’s Plan to Fight Militants

CNY:

China Aug. Consumer Prices Rise 2% Y/Y; Est. 2.2% Gain

GBP:

U.K. Aug. RICS House Price Index at 40 vs Est. 47

 

Today’s data

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

NZD       RBNZ Rate Decision A 3.50% | C 3.50% | P 3.50%

GBP       RICS House Price Balance Aug A 40% | C 47% | P 49%

JPY         BSI Large All Industry Q/Q Q3 A 12.7 | C -10.3% | P -14.6

CNY        PPI Y/Y Aug A -1.20% | C -1.10% | P -0.90%

CNY        CPI Y/Y Aug A 2.00% | C 2.20% | P 2.30%

AUD       Employment Change Aug A 121K| C 15.0K | P -0.3K

AUD       Unemployment Rate Aug A 6.10% | C 6.30% | P 6.40%

06:00     EUR        German CPI M/M Aug (F) C 0.00% | P 0.00%

06:00     EUR        German CPI Y/Y Aug (F) C 0.80% | P 0.80%

08:00     EUR        ECB Monthly Bulletin

12:30     CAD       New Housing Price Index M/M Jul C 0.20% | P 0.20%

12:30     USD       Initial Jobless Claims (SEP 6) C 306K | P 302K

18:00     USD       Monthly Budget Statement Aug C -132.8B | P -94.6B

Harry Hindsight              

• EUR: A patchy day with the market opening around the 1.2940 area and attempting briefly to test above the 1.2950 levels before selling into the Tokyo session lower and through the 1.2930 level and into the London session, with no data to speak of the market was particularly driven by cross trading with weaker AUD and JPY to a certain extent helping the Euro higher again into early London. The market attempted a couple of times to the topside however, having seen the market through the topside 100DMA in the EURGBP and pulled back lower through Asia the market in London drove through the level to peak above the 0.8060 levels but having pushed through recent supportive areas in Cable reversed the move quickly, and EURGBP collapsed and continued into early NYK. With what the market now perceives as only minor numbers the inventories sent a better message as the number weakened, this helped the USD renew its steady rise higher with the Euro closing below the 1.2920 levels.
• GBP: Cable started the day quietly moving higher from the 1.6110 areas only to run out of steam as it approached the 1.6140 levels and the market slipped back to the starting levels and into the grey hours. Early Europeans started a steady round of buying lifting the Cable back to above the 1.6150 levels and then came the EURGBP buying as the market pushed quickly through the 0.8030 area peaking above the 0.8065 levels before the stops had ran there course. The market then slipped back in the same fashion however, the Cable was driven lower in the move higher trading down to the 1.6060 levels that had been the low yesterday. As it was BoE’s Carney speaking before the Treasury select committee leading for the market to believe that the step towards a rate hike is now closer. The Cable rose back to the 1.6120 area and held until deep into the NYK session. The last hour of London again saw the market caught short and the break higher was quick to above the 1.6180 and then a more steady push through the 1.6200 and the limited offers the market had accrued over the past couple of days. The market pushed to above the 1.6220 and although it wasn’t exactly a short squeeze to set the world on fire the market ended the day reluctant to give up its gains and remained around the 1.6200 levels into the close. On top of this a new poll on the referendum shows 47.6% vs. 42.4% in favour of No as opposed to Rupert Murdoch’s Sunday Times article 51% vs. 49% run last week.
• JPY: USDJPY held the low 106.00’s into the 106.20 areas for the early part of the session before starting a steady and concerted rise over the course of the day. One would suspect that yield buyers were again very active pushing the market through the 106.50 light offers and then through to the 106.80 resistance that seems to be a daily event as USDJPY continues onwards and upwards. Having steadily rose in some very strong two way trading and holding above the level for several hours into the close.
• AUD: With the weakness in the JPY the Oz has been drifting lower as the market in the carry trade continues to slowly rise and hold its value for the yield players. The day opened around the 92 cent and as the buying in USDJPY continued through the Asian session the market held steady until the release of the Consumer Confidence number, the market dipped through the 0.9180 levels and then slowed a little as the initial move ran out of momentum drifting for a few hours into the London session. The opening in London saw fresh selling hit and the market traded over the first hour or so to below the 0.9120 levels to take the market close to the top of the ranges from the beginning of the year. While the supportive area held the markets bounce was limited and the market eased slowly through the rest of the day to close around the 0.9160 levels in slow trading for the pair.

Yesterday’s premiership results

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

JPY         Machine Orders M/M Jul A 3.50% | C 4.00% | P 8.80%

AUD       Westpac Consumer Confidence Sep A -4.60% | P 3.80%

CAD       Capacity Utilization Rate Q2 A 82.70% | C 82.50% | P 82.50%

USD       Wholesale Inventories Jul A 0.10% | C 0.50% | P 0.30% | R 0.20%

USD       Crude Oil Inventories A -1.0M | C -1.0M | P -0.9M

Good Luck,

Andy