Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 107.187 | EURUSD 1.29404 | EURJPY 138.703 | AUDUSD 0.90284 | NZDUSD 0.81728 | USDCAD 1.10525 | EURCHF 1.21019 | USDCHF 0.9352 | GBPUSD 1.6233 | EURGBP 0.79718 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               107.24 | 106.93

EUR/USD             1.29605 | 1.2925

EUR/JPY               138.74 | 138.555

AUD/USD            0.9055 | 0.9010

NZD/USD             0.8200 | 0.8162

USD/CAD             1.1064 | 1.1038

EUR/CHF              1.2106 | 1.20965

USD/CHF             0.9357 | 0.9334

GBP/USD             1.6250 | 1.6213

EUR/GBP             0.7980 | 0.79705

For today

• EUR: USD sellers appeared today as the market adjusts before the relevant data this week appears. Early USD sellers managed to take the market higher from the opening 1.2940 areas to above the 1.2960 levels before drifting off from that point onwards suggesting possible fund interest balancing their positions. Light offers into the 1.2970 and higher into the 1.2980 with light stops and then further offers to 1.3000, a push through the level opens up the topside to the 1.3140 level however, the market has had plenty of time to fill in the market now and although there could be some volatility through the level. Downside remains fairly well bid into the 1.2920 areas however, again this is not a given and better bids are probably below the 1.2900 area and into the lows 1.2860 areas.
• GBP: A steady move higher was corrected late into the session with the market initially opening around the 1.6230 areas, a minor dip to through the 1.6225 saw strong buying as the Japanese market made up for the day off yesterday with GBPJPY and limited EURJPY buying moving in, this took the Cable to the 1.6250 which has held since early London yesterday, Topside has weak stops above the 1.6250 level as can be seen, through there sees stronger offers above the 1.6270 area and towards the 1.6300 level and like the Euro there is a good space above there that has now been filled in to some extent. Downside has now pushed through the 1.6220 level with light bids appearing into the 1.6200 levels with stops through 1.6190 areas likely however, it’s all likely to be weak for the moment with the Yes/No Scottish vote still dominating the market. Another yes commentary could take the market to below the 1.6100 with little support in the Cable however; the Euro could act as a buffer to some extent as EURGBP offering appears in the market.
• JPY: The market is back today however, a strong earthquake with in Japan shook the Tokyo market but for the moment there is little news on any damage, with the market moving from the 107.20 areas slowly drifting into the Tokyo session before dropping quickly as the news hit. The market moved through the 107.00 level however, yield buyers held the market and quickly moved to push it back above the figure levels in active two way trading. Topside offers remain from the 107.35-40 areas with light stops likely through 107.50 areas, a move though there should see a slow grind to the 108.00 but likely to be less holding the topside than on previous levels. Downside has yield plays entering the market on dips still however, a push through the 106.60 will see some minor stops appearing in the market, the downside is technically strong around the 106.00 levels and with yield players unlikely to do anything other than invest their funds in stronger vehicles the selling pressure is likely to be limited.
• AUD: Commentary along the lines of rates on hold, AUD overvalued labour market conditions subdued (which conflicts with the last number) and you can see that the market was weakened by the commentary. The market had gained from the 0.9030 into the RBA announcement before starting a slow move lower as the market read into the RBA’s announcements and gave out its views to the market. The Oz was therefore forced lower into the 0.9010 late into the session and holds in the area for the moment. Offers around the 0.9050 levels from last week are limiting the topside for the moment however, there is no real strength in those offers and apart from the couple of failures at the level the topside is really open through to the 0.9150 levels if views were to shift. There is likely to see patches of resistance along the way. The downside is the focus it would seem for the immediate, with talk of 85 cents being muttered however, it’s a long tail that someone is trying to pin on the wrong horse I believe, as the market struggled on the dips at the beginning of the year, wo congestion here and then again around the 89 cent level limits the market if there is no impetus to push it quickly, so that would need the FOMC at least. The market is limited on a push through 90 cent, with patches of buying along the way from longer term shorts. Further interest as medium term players try to pick the lows.

Overnight News

G20:

G-20 Finance Chiefs to Discuss Rising Interest Rates in U.S., UK

AUD:

RBA Reaffirms Rate Stability, Monitoring Housing Price Risks

Housing Bubble Talk in Australia Is ‘Lazy Analysis,’ Hockey Says

RBA’s Kent Says Further Fall in Currency Would Boost Local Firms

RBA’s Kent Says Recent Jobs Data Movements Were Exceptional

G-20 Not Too Far Away From 2% Growth Goal: Australia’s Hockey

Australia ANZ Weekly Consumer Sentiment Falls 1.8% to 111.3

CNY:

China Aug. FDI Falls 14% Y/y, Commerce Ministry Says

China Annual GDP Growth May Be 7-7.5% in 2016-2020: Sec. Journal

China’s Growth Targeting Driving Finl Instability, S&P Says

China Banks Bought Net 20.4b Yuan of Forex for Clients in August

China Ministry: Uncertain of Maintaining Recent Export Gain Pace

JPY:

Governance Trumps Investment Details for GPIF Reform: Shiozaki

Japan’s Aso: To Decide on Sales-Tax Rise by End of 2014

Amari Says Consumption Harmed in July, Aug, Due to Bad Weather

Magnitude 5.6 Earthquake Shakes Tokyo, No Tsunami Threat

JPY: Japan Cannot Offer Military Help to Fight Islamic State: Suga

JPY/IDR:

Japan’s Mitsubishi Motors to invest $600 mln in Indonesian car factory

GBP:

BOE Mortgage Curbs Should Prevent Dangerous Debt Build up: Paper

Major Cos. Sign Letter on U.K. Business Rates Reform: Telegraph

 

Today’s data

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

08:30     GBP       CPI M/M Aug C 0.40% | P -0.30%

08:30     GBP       CPI Y/Y Aug C 1.60% | P 1.60%

08:30     GBP       Core CPI Y/Y Aug P 1.80%

08:30     GBP       RPI M/M Aug C 0.50% | P -0.10%

08:30     GBP       RPI Y/Y Aug C 2.50% | P 2.50%

08:30     GBP       PPI Input M/M Aug C -0.20% | P -1.60%

08:30     GBP       PPI Input Y/Y Aug C -6.60% | P -7.30%

08:30     GBP       PPI Output M/M Aug C -0.10% | P -0.10%

08:30     GBP       PPI Output Y/Y Aug C -0.20% | P -0.10%

08:30     GBP       PPI Output Core M/M Aug P 0.00%

08:30     GBP       PPI Output Core Y/Y Aug C 0.90% | P 0.90%

09:00     EUR        German ZEW (Economic Sentiment) Sep C 5.6 | P 8.6

09:00     EUR        German ZEW (Current Situation) Sep C 42 | P 44.3

09:00     EUR        Eurozone ZEW (Economic Sentiment) Sep C 21.3 | P 23.7

12:30     CAD       Manufacturing Shipments M/M Jul C 1.10% | P 0.60%

12:30     USD       PPI M/M Aug C 0.10% | P 0.10%

12:30     USD       PPI Y/Y Aug C 1.80% | P 1.70%

12:30     USD       PPI Core M/M Aug C 0.10% | P 0.20%

12:30     USD       PPI Core Y/Y Aug C 1.70% | P 1.60%

Harry Hindsight              

• EUR: A lack of newsworthy fundamentals left the market drifting off from the opening levels, moving from 1.2970 levels and into the 1.2950 during Asia, although it recovered somewhat the move to the grey hours saw the market again drifting before picking up speed as early London moved into to put the market back to the 1.2910 levels before moving into the NYK session and a little bit of a recovery. The market failed to move back through the 1.2950 level and the market held around 1.2940 into the close. As with any day with little liquidity the volatility suffers and today was no different with only light movements during the London session.
• GBP: Cable had little voice of its own, moving lower over the course of the day from the opening 1.6270 levels and dropping in early Asia to the 1.6235 levels before basing off that line, recovering into London as the EURGBP was sold into the grey hours and through early London pushing from the 0.97985 area to below 0.7950, Euro’s took the brunt of the move as Cable remained above the 1.6230 until a steady drift into NYK broke through to the 1.6225 mid-way through NYK. The market held into the close around the 1.6225-35 areas with only a limited reaction to the ongoing Yes/No in the Scotland vote.
• JPY: With yesterday being a bank holiday the market was light on traders as the Tokyo session took a long weekend. This was reflected in the price action with a quiet session through Asia and into the NYK session with barely a flicker, moving from the opening 107.25 up through 107.35 in early trading before slumping back from then on and bouncing between 107.15-30 until the move into NYK and the US numbers, a weak IP number for August set the market back a little but even then the downside was limited and it bounced from the 107.00 area back to the 107.20 areas before closing around that area in quiet trading. Also it should be noted that a Typhoon whipping around the area in the vicinity of Hong Kong.
• AUD: The Oz opened lower than expected around the 0.9012 areas and held for several hours through the session before the market dipped lower with USDJPY and light selling in AUDJPY, light stops through the 90 cent area took the market too its lows before holding during the grey hours and rising back to the 90 cent level. London slowly bought the Oz back through into the NYK session pushing to the 0.9050 level as the USDJPY fell back. The rest of the session was quiet and held around the 0.9030 area into a quiet end to a quiet day.

Yesterday’s premiership results

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

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

CHF        Producer & Import Prices M/M Aug A -0.20% | C 0.00% | P 0.00%

CHF        Producer & Import Prices Y/Y Aug A -1.20% | C -1.00% | P -0.80%

EUR        Eurozone Trade Balance (EUR) Jul A 12.2B | C 15.9B | P 13.8B

USD       Empire State Manufacturing Index Sep A 27.5 | C 15 | P 14.69

USD       Industrial Production Aug A -0.10% | C 0.30% | P 0.40%

USD       Capacity Utilization Aug A 78.80% | C 79.20% | P 79.20%

Good Luck,

Andy