Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 107.362 107.30-38 | EURUSD 1.29642 1.2960-71 | EURJPY 139.175 139.10-205 | AUDUSD 0.90372 0.9015-16 | NZDUSD 0.8145 0.8135-40 | USDCAD 1.10911 1.1087-95 | EURCHF 1.20997 1.2090-1.2105 | USDCHF 0.93339 0.93025-435 | GBPUSD 1.62665 1.6270-75 | EURGBP 0.79696 0.79475-945 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               107.365 | 107.155

EUR/USD             1.2980 | 1.2950

EUR/JPY               139.135 | 138.89

AUD/USD            0.9026 | 0.8990

NZD/USD             0.8164 | 0.8124

USD/CAD             1.1100 | 1.1086

EUR/CHF              1.2105 | 1.2088

USD/CHF             0.9345 | 0.9311

GBP/USD             1.6279 | 1.6229

EUR/GBP             0.7984 | 0.79705

 

For today

  • EUR: Implementation of further sanctions against the Russians albeit very late in the day led to worries of retaliation forced the Euro steadily off the opening 1.2970 levels and down to the 1.2950 areas before sufficient support appeared to stop the market slipping further and the market heading back towards the opening around the 1.2965-60 levels. Light bids around the 1.2950 areas but with better bids below the 1.2930 into the 1.2910 areas, weak stops through the 1.2900 levels. Topside has light offers into the 1.3000 levels with only very light stops through the levels and possibly lost in two way play. A move through the 1.3000 level though opens up a larger move with the drop from 10 days ago open to 1.3100-40 levels and then stronger offers. As stated elsewhere, TLTRO, FOMC and Scottish referendum will play there parts with TLTRO likely to have early baring but meaningless to some extent only helping to underpin banks than help the general inflation rate that is the concern to the market.
  • GBP: The market remains cautious and choppy with each little bit of news on the Scottish referendum causing minor moves and positioning limited. Opening around the 1.6270 levels as early players believed the news over the weekend of little consequence however, the move into the Tokyo session saw the market drop back as light EURGBP buying moved into the market taking the Euro from its lows and the Cable from its highs. The markets have moved around in a 20 pip range a fairly respectable range for Cable however, the downside 1.6235 levels remains vulnerable. Light bids through to 1.6200 where slightly better bids are likely however, nothing is certain at the moment and a movement through the 1.6200 level leaves better bids a long way off around the 1.6100 areas. Topside has some offers from the 1.6270 area however, as with the Euro a move through the 1.6300 level the market opens up to a potential move higher negating the move down through to the start of the drop off around the 1.6460 levels.
  • JPY: USDJPY holds its levels however, it was unable to move out of the range seen on Friday, moving around the 107.15/35 levels with a slight bias to the downside. With a bank holiday tomorrow long weekends seem to be the game for the day. Topside offers from the 107.40 area going deep into the 107.60 levels before the next batch from 107.80 onwards, as with previous levels the market is likely to struggle through the levels probably not as much as previously. Light bids around 107.00 before giving way to weak stops a move through the 106.50 levels will leave the market in a stronger bid area into the 106.00 levels.
  • AUD: The market opened lower after weekend releases in China shows that show 7.5% this year, but increased chances of policy easing. The market then move3 sideways with several attempts on the 90 cent level before drifting sideways for a good portion of the day. As the market moved towards the grey hours the 90 cent gave way however, the market was limited again and held the 0.8990 areas. Topside offers above the 0.9020 levels and then around the 0.9040 area and then congestion over 30 pips or so. The bids remain from current levels down through 0.8970 before giving way to an open market down to the 89 cent level and a break here opens up a test of the years lows through 0.8850 where there is likely to be some reasonable bids.

Overnight News

JPY:

Japanese Companies to Pay Record Interim Dividends, Nikkei Says

Hamada Says Japan Economy Must Be Good Before Tax Rise: Nikkei

AUD:

RBA Papers Say AUD Was 8% Above Justified Level in Second Qtr

CNY:

China Looks to Have Mutual Connect With More Market, CSRC Says

PBOC Should Refrain From Interest Rate Cut For Now: Sec. News

China End-Aug. Yuan Forex Positions Fall 31.1b Yuan M/m

Shanghai Free Trade Zone Deputy Director May Step Down: SCMP

SEK:

Sweden’s Social Democrats Prepared to Seek Broad Support

GBP:

U.K. September House Prices Rise 0.9% M/m, Rightmove Says

 

 

Today’s data

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

GBP       Rightmove House Prices M/M Sep A 0.90% | P -2.90%

07:15     CHF        Producer & Import Prices M/M Aug C 0.00% | P 0.00%

07:15     CHF        Producer & Import Prices Y/Y Aug C -1.00% | P -0.80%

09:00     EUR        Eurozone Trade Balance (EUR) Jul C 15.9B | P 13.8B

12:30     USD       Empire State Manufacturing Index Sep C 15 | P 14.69

13:15     USD       Industrial Production Aug A 0.30% | P 0.40%

13:15     USD       Capacity Utilization Aug A 79.20% | P 79.20%

 

Weekend News

GBP:

Scottish Independence Polls Conflict as Campaigning Nears Climax
Scotland Votes: 49% ‘Yes,’ 50% ‘No’ in Panelbase Poll
U.K. Saw $27 Billion Outflow in August as Scottish Vote Loomed
U.K. Retailers Say Prices May Rise After a Scottish ‘Yes’ Vote
EUR/GBP:

EU Ministers Concerned About Scottish Separation, Osborns Says
EUR:

Euro Area Split on State Guarantees for ECB’s ABS-Purchase Push
Too Expansive Monetary Policy Is Risky, Weidmann Tells Corriere
ECB Bank Cash Boost May Near $1.3 Trillion, Gonzalez-Paramo Says
Constancio Says ECB Supports Juncker’s Investment Plan
Greece Doesn’t Need New Bailout Loans, Samaras Tells Real News
Scottish Vote Reignites Secession Debate in Italy, FT Reports
JPY:

Japan’s Abe Wants to Consider Sales Tax Rise to 10% neutrally
Aso Says Japan Would Lose Trust If Tax Isn’t Raised, Yomiuri
Lagarde Says Japan Should Raise Tax to 10% as Planned: Nikkei
Japan to Hold Extra Diet Session from Sept. 29, Mainichi Says
JPY/IDR:

Mitsubishi Motors to Build 60 Bln Yen Indonesia Plant: Nikkei
G20:

G-20 Discussing 16% to 20% Bank Capital Adequacy Ratio: Nikkei
USD:

Islamic State Bombs Iraq Oil Refinery as U.S. Hardens Stance
CNY:

China Industrial-Output Growth at Five-Year Low in Test for Li
PBOC Stats Official: China Must Change ‘No Default’ Mind-set
China Phases out Direct Control on Home Prices: Bus. Journal
Ex-PBOC Deputy Gov: Bank Reform More Important Than Rate Reform
SEK:

Sweden’s Reinfeldt Fights for Survival as Polls Show Defeat

 

Harry Hindsight

  • EUR: The market moved quietly through the Asian session with the market basing off the 1.2915 levels into London where the market eventually broke through the topside but only to above the 1.2930 areas. The market eased higher as we approached the NYK session having already ignored the Eurozone better than expected numbers. Slightly better than expected US numbers sent the Euro initially lower before jumping to above the 1.2955 levels, although the next batch of numbers were ok the market moved quickly off the 1.2910 lows and traded in stages higher with a minor short squeeze through the previous high to trade just below the 1.2980 levels before slipping back to below 1.2950 as profit taking took the market lower on weak liquidity. So has the Euro turned a corner, this week will possibly have some telling with implementation of the TLTRO with tenders supposedly strong.
  • GBP: A choppy day over the day, moving from early highs above the 1.6275 levels the market dropped steadily on the move into the Tokyo session the market held in the 1.6230 levels holding into the London session as the market becomes less interested in Polls that are dubious at best. Saying that the move into the grey hours the market dipped lower on earlier seller’s pre-London pushing to the 1.6220 levels before reversing the closer the market got to the London opening, the market was driven by strong selling in the EURGBP with the Euro holding steady Cable was forced to above the 1.6260 levels and so the day continued, and although I said earlier that the polls have less interest the market did react over the course of the day to the little bits that they were fed, dropping down to the 1.6205 and trading up to above the 1.6270 towards the last few hours of the market finishing the day just short of the highs.
  • JPY: The market moved from the opening levels higher, trading slightly lower to below the 107.00 before moving into the Tokyo session and starting a steady rise through offers to trade just below the 107.40, although the market slipped off from the highs into the London session the move into NYK again saw the topside tested from the basing areas of 107.15 through London left behind and the market trading for good periods above the 107.35 levels.
  • AUD: As the USDJPY rises the AUD falls, moving slowly through the 91 cent levels dropping the most during early Tokyo however that was only about 30 pips, the market then drifted through the rest of the session as the market concentrated on the EUR, GBP, USD over the course of the day leaving the market just off the lows of 0.9030.

Friday’s premiership results

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

NZD       Business NZ Manufacturing Index Aug A 56.5 | C 53 | P 53.5

JPY         Industrial Production M/M Jul (F) A 0.40% | C 0.20% | P 0.20%

GBP       Construction Output M/M Jul A 0.00% | C 0.60% | P 1.20%

EUR        Eurozone Industrial Production M/M Jul A 1.00% | C 0.60% | P -0.30%

EUR        Eurozone Employment Q/Q Q2 A 0.20% | C 0.10% | P 0.10%

USD       Import Price Index M/M Aug A -0.90% | C -1.00% | P -0.20%

USD       Advance Retail Sales Aug A 0.60% | C 0.40% | P 0.00%

USD       Retail Sales Less Autos Aug A 0.30% | C 0.30% | P 0.10%

USD       U. of Michigan Confidence Sep (P) A 84.6 | C 83.1 | P 82.5

USD       Business Inventories Jul A 0.40% | C 0.50% | P 0.40%

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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