Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 108.372 | EURUSD 1.28652 | EURJPY 139.418 | AUDUSD 0.89606 | NZDUSD 0.81198 | USDCAD 1.09964 | EURCHF 1.21071 | USDCHF 0.94113 | GBPUSD 1.62761 | EURGBP 0.79042 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               108.80 | 108.32

EUR/USD             1.28735 | 1.2834

EUR/JPY               139.88 | 139.22

AUD/USD            0.8974 | 0.8939

NZD/USD             0.8117 | 0.8081

USD/CAD             1.1023 | 1.0999

EUR/CHF              1.2112 | 1.2101

USD/CHF             0.9433 | 0.94065

GBP/USD             1.6285 | 1.6247

EUR/GBP             0.7912 | 0.78905

For today

• EUR: So the fateful day arrives, the Scottish Independence vote, but why in the Euro slot, because several countries will be watching with interest as they have their own indecency worries to watch for, this in turn makes the Europeans very nervous about a Yes vote and an impending application from Scotland if the vote was to be Yes. So the movement today and tomorrow will have some reflection on events within the UK. The move into the Asian session saw the market again breaking lower pushing through the 1.2860 levels triggering weak stops and into the mid 1.2830’s before starting to find some support in the market, as a fresh set of eyes peruse the FOMC commentary they’ve now drawn the conclusion that there was nothing new from the Committee and nothing has really changed, the market started to pick itself up from the early lows and drove steadily higher in a two way battle and plenty of volume going through Asia, the market eventually stalled just above the 1.2870 levels and drifts after a concerted effort to move beyond that. To the topside the 1.2880 level now holds the better offers with EURJPY 200DMA around the 139.80-85 level also in play at the moment, through 1.2880 the market has little to halt a move back towards the 1.2920 and then 1.2950-70 levels with only minor stops now in play. The downside sees bids building around the 1.2830 areas likely to hold the market in a range until the TLTRO’s release and maybe the SNB decision and commentary are out of the way. Through the low 1.2800 area light stops are likely to be around however; a push through 1.2750 is likely to offer a larger break stops and an opening to below 1.2700 levels.
• GBP: Less movement to the Cable than we’ve seen in the Euro over the session as the EURGBP made its way steadily to above the 0.7900 levels pushing to around the 0.7910 levels. Cable moved off the 1.6280 levels where it closed to trade lower and dip below 1.6250 into the Tokyo opening and a recovery to the 1.6260 and then a steady climb through to the 1.6270’s, the market remains less robust than the Euro however, todays the day when half the Scottish will be going home from the voting booths to push the DVD button and watch Mel Gibson with a painted face scream freedom, while the other half go back to living in the today. Whatever you believe or think and everyone in the UK has an opinion (see Clint Eastwood for the definition of opinion) the day is likely to be very choppy with exit polls from the far flung reaches impacting throughout the day with as you’d expect differences of opinion very likely and the polls will swing one way then the other. Topside is now wide open to a recovery with the gap from the drop on the last big poll difference filled, light offers above the 1.6360 areas opening up the next key level around 1.6450 likely to be strongly offered from short term longs and then 1.6600 level becomes the target. Downside has light bids around the 1.6200 levels with congestion on the way there likely however, the market is nervous and any level between 1.6000-1.6600 is vulnerable until the final announcement and is likely to show in the market as a growing liquidity issue if the choppiness were to occur through the day.
• JPY: From the close in NYK the market continued to move higher pushing through into Tokyo to above the 108.60 level from the close below 108.40. As the Euro rose the selling in EURJPY around the 200DMA pushed the USDJPY lower and back to the opening areas before the demand in USDJPY again increased and the market moved steadily towards the 108.80 areas before holding below the level. For once the buyers were a complete mix of types with everyone joining the buying into the resting offers. Topside sees offers above 108.80 and again not as strong as previous levels still go back through 109.00 with light stops likely and then a continuation of offers into 108.20 the offers now though are spread more evenly through to 110.00 with option barriers likely to be in play. Downside sees light bids below 108.00 levels however, the rise has been fairly quick over the past 5 big figures and without the Yield buyers this would be a risk however, as long as they keep investing overseas the flows will continue. In the meantime the market has bids in patches with 107.60 and then 107.20 some strength, a push through the 107.00 level though opens up a move to the 105.00 level with only limited congestion around the area and so on.
• AUD: The Oz drifted in early trading pushing from the 0.8960 holding areas seen into the close to trade down to the 0.8940 as USD rose against both the Oz and JPY, and AUDJPY carry pushing steadily higher and into a stronger offering area at 97.50/60. Downside sees plenty of congestion with the better strength around the 0.8900 levels, a breakthrough will open a test of the years lows but this is less likely with the Oz playing a peripheral part in the market as focus remains on the UK, topside has little to contend with any strong moves with the move from the 94 cent level moving quickly to the current levels with little direct news for the move and more a USDJPY move leaving the Oz weakened, saying that this is what the RBA wants so happy days. Light offers around the 90 cent level with weak stops likely through 0.9020 area and then very mixed and patchy all the way to the 92 cent area.

Overnight News

JPY: GPIF, Japan Pension Funds Slow Overseas Investments in 2Q

Shiozaki: GPIF Reform Bill Shouldn’t Be Compiled Hastily: Kyodo

Komeito’s Yamaguchi Says Must Watch Excessive Yen Weakening: NHK

Japan’s Exports Fall Less Than Economists Forecast in Abe Boost

Japan’s Household Assets Increase 2.7% Y/Y in 2Q, BOJ Says

USD/JPY:

U.S., Japanese Finance Chiefs Said to Meet Ahead of G20: Reuters

Japan’s Amari, U.S. Arranging TPP Talks Next Week: Reuters

JPY/RUB:

Japan to Step Up Sanctions against Russia, Yomiuri Reports

NZD:

New Zealand Economy Grew Faster-Than-Expected 0.7% in 2Q

N.Z. Conservative, Internet Mana Support Declines in Herald Poll

CNY:

China Aug. New Home Prices Fall M/m in 68 Cities; 64 in July

China Should Prevent Big Rises in Leverage Ratio: Fin. News

Pimco Sees 2015 China Growth Slowing to Around 6.5%

CNY/INR:

China and India Have Compatible Development Strategies, Xi Says

EUR:

Spain Cabinet to Meet if Catalan Vote Called, El Pais Reports

 

Today’s data

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

NZD       GDP Q/Q Q2 A 0.70% | C 0.60% | P 1.00%

JPY         Trade Balance (JPY) Aug A -0.92T | C -0.99T | P -1.02T

06:00     CHF        Trade Balance (CHF) Aug C 2.56B | P 3.98B

07:30     CHF        SNB Rate Decision C 0.00% | P 0.00%

08:30     GBP       Retail Sales M/M Aug C 0.40% | P 0.10%

10:00     GBP       CBI Trends Total Orders Sep C 9 | P 11

12:30     CAD       International Securities Transactions (CAD) Jul C 2.47B | P -1.07B

12:30     USD       Initial Jobless Claims (SEP 13) C 312K | P 315K

12:30     USD       Building Permits Aug C 1.04M | P 1.06M

12:30     USD       Housing Starts Aug C 1.04M | P 1.09M

14:00     USD       Philly Fed Survey Sep C 22.1 | P 28

Harry Hindsight              

• EUR: A quiet session during Asia moving from the 1.2960 level and drifting steadily lower. The market moved through the 1.2950 levels and into the London session. London bought lightly pushing through the 1.2970 dragged slightly higher by the movement in Cable. Eurozone CPI were a little uninspiring however the market maintained its gradual move high pushing into the NYK session to just above the 1.2980 level before rejecting the level and dipping back as US releases fell below expectations, giving a brief hope of interest rates being delayed because of falling interest, the dip to the 1.2940 was over exaggerated because of the nervousness of the market, but regained its composure to push back above the 1.2960 and into the FOMC release. No change was expected and the market was not disappointed however, the first mention of interest rates was eagerly swept up and while the main body of text was dovish on the point setting the date into the 2^nd or 3^rd qtr. Yellen indicated that nothing had changed and spoke as if it was imminent overriding the previously mentioned. The market touched again above the 1.2980 level before falling quickly to 1.2900, as the market tried to make sense of the commentary the bounce from the lows was limited to the 1.2950 levels before again dropping quickly and with more force, triggering stops through the 1.2900 level before running into stronger bids around the 1.2880 levels, the market had the bite between the teeth and continued pushing to the 1.2860 areas into the close. Profit taking and demand for EURCHF and EURGBP limited the move to the downside with mostly fund profit taking seen.
• GBP: Cable dipped from the opening before steadying and pushing higher at with more conviction than one would have expected. Cable pushed from the 1.6270 levels on the opening to trade above the 1.6280 area into the grey hours and as the market moved to the London session touched the 1.6300 levels. Expected commentary from the BoE with the vote expected at the same level set the market slightly lower however, the market was bid around the 1.6300 levels and held and started a slow clime pushing steadily to just below the 1.6360 levels. US numbers had only limited impact on the market in Cable drifting to the 1.6320 levels. The release of FOMC left the market a little light either side of the market and the push through 1.6300 triggered weak stops before bouncing and only then drifting from the 1.6320 levels to 1.6280.  EURGBP was quiet from the opening holding around the 0.7965 before reaching late into the session from then on a steady drift lower saw the Cable pushed higher and the market dipped to 0.7940 before meeting the first support levels. The market held around the 0.7950 areas for a few hours through the UK releases before again drifting to a fresh low on the day just below 0.7930, the range then maintained a 0.7930-50 level until the FOMC release when again the market tested the 0.7930 and after a brief pause broke lower trading a little bit more decisively pushing down to the 0.7900 areas into the close.
• JPY: USDJPY marked time through the whole Asian session and deep into London. Never managing to break through the 107.40 area and trading for the most part in the 107.20-35 areas, NYK started to buy as the market moved closer to the FOMC pushing to 107.60 before the commentary from Yellen was released and the market picked up from a spike to 107.40 then moving quickly through the 108.00 level, offers were missed on the move and the selling pushed the pair back to the 107.60’s before again rising and pushing steadily through the 108.20 and weak stops to finish the day around the 108.30’s into the close.
• AUD: As with the USDJPY the market held its value for a good period of the day, moving from the opening above 0.9090, drifting with news China will add liquidity to 5 of its top banks to the tune of $81.4B the only real piece of news. The market then stayed in a 0.9060-80 range  moving through into the NYK session before the USD started to push higher. After the initial release the market moved in a similar fashion to all the other pairs spiking higher initially before dropping quickly to below the 0.8980 bids and bouncing away and back above the 90 cent level, the market then started a slow steady drift lower before triggering weak stops through the 0.8980 to the mid 0.8950’s before holding and limping to the close.

Yesterday’s premiership results

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 | R 1.47B

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

GBP       BoE Official Bank Rate Votes A 2–0—7 | C 2–0—7 | P 2–0–7

GBP       BoE Asset Purchase Facility Votes A 0–0—9 | C 0–0—9 | P 0–0–9

GBP       Jobless Claims Change Aug A -37.2K | C -29.7K | P -33.6K | R -37.4K

GBP       Claimant Count Rate Aug A 2.90% | P 3.00%

GBP       ILO Unemployment Rate (3M) Jul A 6.20% | C 6.30% | P 6.40%

CHF        ZEW (Expectations) Sep A -7.7 | P 2.5

EUR        Eurozone CPI M/M Aug A 0.10% | C 0.10% | P -0.70%

EUR        Eurozone CPI Y/Y Aug (F) A 0.40% | C 0.30% | P 0.30%

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

USD       CPI M/M Aug A -0.20% | C 0.00% | P 0.10%

USD       CPI Y/Y Aug A 1.70% | C 1.90% | P 2.00%

USD       CPI Core M/M Aug A 0.00% | C 0.20% | P 0.10%

USD       CPI Core Y/Y Aug A 1.70% | C 1.90% | P 1.90%

USD       Current Account Balance Q2 A -99.5B | C -$115.0B | P -$111.2B | R -102.1B

USD       NAHB Housing Market Index Sep A 59 | C 56 | P 55

USD       Crude Oil Inventories A 3.7M | C -0.9M | P -1.0M

USD       FOMC Rate Decision A 0.25% | C 0.25% | P 0.25%

Good Luck,

Andy