Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 107.127 | EURUSD 1.29598 | EURJPY 138.839 | AUDUSD 0.90933 | NZDUSD 0.81986 | USDCAD 1.09707 | EURCHF 1.20863 | USDCHF 0.9326 | GBPUSD 1.62762 | EURGBP 0.79627 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               107.29 | 107.10

EUR/USD             1.2966 | 1.2949

EUR/JPY               138.95 | 138.79

AUD/USD            0.9106 | 0.9061

NZD/USD             0.8205 | 0.8172

USD/CAD             1.0982 | 1.0969

EUR/CHF              1.20905 | 1.2084

USD/CHF             0.93345 | 0.9324

GBP/USD             1.6288 | 1.6250

EUR/GBP             0.79685 | 0.7952

For today

• EUR: The quiet before the storm maybe, with today’s FOMC likely to be the first of the 3 events of the week has the market easing back on its recent positioning, the market opened in the Euro around the 1.2960 levels having seen a push above the 1.2990 into late NYK fade to the current levels, the market has been very quiet over all with little interest in the Euro as the market now sits back. Topside offers through the 1.3000 are likely to fade away if the commentary is the slightest bit dovish over rate moves into the New Year. A push through there opens up a larger move to the 1.3100 levels and a move back into ranges from just over a week ago. Downside has light bids through the 1.2920 area giving way to stronger bids below the 1.2900 levels with stops possibly through the 1.2880-70 levels for a deeper test around 1.2800. However, to temper this remains the link with EURGBP and the results of the TLTRO the following day might stabilize the market in the short term.
• GBP: A quiet climb from the early lows around 1.6250 taking the market back through the opening levels of 1.6270 and on towards 1.6290 in a quiet session, the fact the market has moved above the 1.6300 level during the previous 24hrs and the polls are now coming back consistently with the No vote ahead has led the market back to the levels before the large gap on the charts from last week’s opening. This said offers stand around the 1.6310 areas moving a little back with light stops probably through the 1.6330 areas before opening up to stronger offers towards the 1.6400 levels. Downside is open to wild moves still with light bids through 1.6250 and into the 1.6200 area as real money takes advantage, a break through the 1.6180 level is likely to see light stops and then light and patchy bids from then on until deep into the 1.6080-20 areas where the market stiffens a little.
• JPY: With 3 important bits of news over the next few days the market has again stalled in Asia opening around the 107.15 areas it moved slowly towards the 107.30 areas having dipped early before Tokyo to the 107.10 levels, The yield players still seem happy enough to buy on dips and for the movement the rest of the market is beginning to shy away from them. Topside offers from 107.35 extending into the 107.50 area before any likely stops appear, a push through there in all likelihood will only extend to the 107.80 areas before offers again thicken up in front of 108.00 however, the real money offers are likely to be less active than previous moves higher and a decent push will see it through. The downside of course is wide open however, as mentioned the yield players seem to enter the market when it suits and will pick any weakness to continue buying, a break through the 106.80 level will see weak stops however, a stronger level is likely around the 106.50 levels and then patches of support into 106.00 another push and this exposes 105.50 and so on until 105.00 is tested however, buyers can appear at anytime.
• AUD: With the market stuck in no-man’s land the Oz was little different with the only gleam for the day was the announcement of the Chinese providing $81.4B liquidity to 5 of its biggest banks, a bit like the ECB, so of little import to the general economy, the Oz opened around the 0.9090 levels and has drifted since easing through the 0.9080 levels and dipping towards the 0.9060 areas into the grey hours. Topside offers around 0.9120 and onwards dominate the area before giving way to a patchy mix from then until an attempt through 0.9150 slightly better offers but nothing insurmountable and the market is open to the 92 cent level. Downside is less clear, the 90 cent areas have been comfortably bid over the course of the last 3 days with interest into the 0.8980 area always appearing and marks a congested area from the beginning of the year and is likely to be similar all the way to the 88 cent levels.

Overnight News

CNY:

PBOC Says China’s Lending Rate at Relatively Low Level: Caixin

JPY:

Sales-Tax Rise Delay Would Hurt Japan Credibility: OECD’s Tamaki

Foreign Visitors to Japan Rose 22% Y/y in Aug. to 1.1m

NZD:

NZ Current Account Deficit Narrows as Goods Surplus Widens

New Zealand Has Biggest Bond Inflows in More Than Five Years

N.Z. Online Skilled Job Vacancies Fell 3.5% in August: Ministry

CNY/NZD:

China Started Probe Into Assets, People in New Zealand: FT

 

Today’s data

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

NZD       Current Account Balance Q2 A -1.07B | C -1.04B | P 1.41B | P 1.47B

AUD       Westpac Leading Index M/M Aug A -0.10% | P -0.10%

08:30     GBP       BoE Minutes

08:30     GBP       BoE Official Bank Rate Votes C 2–0—7 | P 2–0–7

08:30     GBP       BoE Asset Purchase Facility Votes C 0–0—9 | P 0–0–9

08:30     GBP       Jobless Claims Change Aug C -29.7K | P -33.6K

08:30     GBP       Claimant Count Rate Aug P 3.00%

08:30     GBP       ILO Unemployment Rate (3M) Jul C 6.30% | P 6.40%

09:00     CHF        ZEW (Expectations) Sep P 2.5

09:00     EUR        Eurozone CPI M/M Aug P -0.70%

09:00     EUR        Eurozone CPI Y/Y Aug (F) C 0.30% | P 0.30%

09:00     EUR        Eurozone CPI – Core Y/Y Aug (F) C 0.90% | P 0.90%

12:30     USD       CPI M/M Aug C 0.00% | P 0.10%

12:30     USD       CPI Y/Y Aug C 1.90% | P 2.00%

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

12:30     USD       CPI Core Y/Y Aug C 1.90% | P 1.90%

12:30     USD       Current Account Balance Q2 C -$115.0B | P -$111.2B

14:00     USD       NAHB Housing Market Index Sep C 56 | P 55

14:30     USD       Crude Oil Inventories P -1.0M

18:00     USD       FOMC Rate Decision C 0.25% | P 0.25%

Harry Hindsight              

• EUR: The Euro opened around the 1.2940 and gradually eased higher as USD liquidation ran through the market in front to the FOMC, pushing gradually through the 1.2950 and triggering some weak stops on the way through to touch just beyond the 1.2960 level. The market then started a long steady slip lower as if the original move was limited to one or two players. The market fell back to trade into the mid 1.2920’s into the London session so a half decent range considering. London was a steady buyer which initially led to the market in EURGBP heading higher, which was in all likelihood an option barrier expiring, the market pushed through the 0.8010 areas before steadily moving lower over the course of the day, extending the Euro high to the 1.2968 level. The market moved into the 1.2940 levels into the NYK session. ZEW numbers in Germany were mixed with the Eurozone showing poor economic sentiment again. US PPI numbers were mixed and once the option cut in NYK was over with the Euro headed quickly higher through the 1.2990 as if the EURGBP option was too the topside and once removed allowed the market to move or the defence effectively bought their shorts back once over with. The market hit the highs as with early in the day the market slipped back steadily to the 1.2960 levels into the close.
• GBP: The market opened around the 1.6230 area and moved higher into the Tokyo session with some light GBPJPY helping GBP higher and Cable moved through the 1.6250 levels briefly before starting a long steady selling through into the 1.6220 area on a steady buying pressure in EURGBP picked up into the London market. The break through the 1.6210 levels saw weak stops triggered dropping the market back to 1.6190 quickly before steady pressure pushed it through the 1.6170 levels before holding in the 1.6160’s. The move through London from that point was a steady reversal which continued as the EURGBP backed away from the highs and into the NYK session, USD correction kicked into the market until the NYK option cut went past and the market jumped quickly triggering weak stops placed after fresh shorts entered and quickly pushed to the 1.6310 levels, filling the gap from the opening from last week’s opening. The market didn’t run away though which was a possibility, but drifted lower with the Yes/No and FOMC still to impact. The market ended the day around the 1.6270 areas in quiet late trading. There was a spike lower as a an incorrect poll headline hit with a Yes vote showing 52%, this was quickly corrected to No at 52% and the spike was corrected.
• JPY: A whippy day with similar moves on the opening in each zone, the market opened around the 107.18 levels with the market dipping into Tokyo and then extending to below 106.95 areas, once the initial USD selling was over with the market then rallied steadily to push against the topside resistance and the London opening. London sold the market in the same tone taking it back to 107.05 before holding a close range roughly 107.05-15 for the move into NYK, option expiry came and went with the USD dropping quickly through to the 106.80 areas before recovering just as quickly, the spike lower may have been also connected to the misreading of the Scottish poll number causing a quick GBPJPY selling to impact, the market was briefly down there before moving quickly back to the 107.05-15 range and a quiet move to the close.
• AUD: After a quiet start the market moved from the 0.9030 levels and looked set to reject a move lower however, the market initially struggled to move through the 0.9050 areas and the run to London saw the Oz drift ever lower, with little news to drive the market in either direction. The market moved into the 0.8990 areas and a potential move into the lower ranges from the beginning of the year. As with the EURGBP the NYK option cut seemed to have an effect on the market and Oz shot quickly higher triggering weak stops through the 0.9050 levels it struggled at earlier in the day and continuing to the 0.9080 levels, the market continued to push and eventually gnawed its way through the 91 cent level and push briefly through 0.9110 before coming to a halt, the market drifted off down to below the 0.9090 area as profit taking entered the market into the close.

Yesterday’s premiership results

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

GBP       CPI M/M Aug A 0.40% | C 0.40% | P -0.30%

GBP       CPI Y/Y Aug A 1.50% | C 1.60% | P 1.60%

GBP       Core CPI Y/Y Aug A 1.90% | C 1.80% | P 1.80%

GBP       RPI M/M Aug A 0.40% | C 0.50% | P -0.10%

GBP       RPI Y/Y Aug A 2.40% | C 2.50% | P 2.50%

GBP       PPI Input M/M Aug A -0.60% | C -0.20% | P -1.60% | R -1.70%

GBP       PPI Input Y/Y Aug A -7.20% | C -6.60% | P -7.30% | R -7.50%

GBP       PPI Output M/M Aug A -0.10% | C -0.10% | P -0.10%

GBP       PPI Output Y/Y Aug A -0.30% | C -0.20% | P -0.10%

GBP       PPI Output Core M/M Aug A 0.10% | C 0.00% | P 0.00% | R -0.10%

GBP       PPI Output Core Y/Y Aug A 0.90% | C 0.90% | P 0.90%

EUR        German ZEW (Economic Sentiment) Sep A 6.9 | C 5.6 | P 8.6

EUR        German ZEW (Current Situation) Sep A 25.4 | C 42 | P 44.3

EUR        Eurozone ZEW (Economic Sentiment) Sep A 14.2 | C 21.3 | P 23.7

CAD       Manufacturing Shipments M/M Jul A 2.50% | C 1.10% | P 0.60% | R 0.90%

USD       PPI M/M Aug A 0.00% | C 0.10% | P 0.10%

USD       PPI Y/Y Aug A 1.80% | C 1.80% | P 1.70%

USD       PPI Core M/M Aug A 0.10% | C 0.10% | P 0.20%

USD       PPI Core Y/Y Aug A 1.80% | C 1.70% | P 1.60%

Good Luck,

Andy