Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 108.685 | EURUSD1.29222 | EURJPY 140.445 | AUDUSD 0.89904 | NZDUSD 0.8139 | USDCAD 1.0936 | EURCHF 1.20673 | USDCHF 0.93383 | GBPUSD 1.63956 | EURGBP 0.78811 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               109.46 | 108.65

EUR/USD             1.2929 | 1.28975

EUR/JPY               141.21 | 140.425

AUD/USD            0.9005 | 0.8937

NZD/USD             0.8179 | 0.8117

USD/CAD             1.0970 | 1.0931

EUR/CHF              1.2073 | 1.2065

USD/CHF             0.9359 | 0.9335

GBP/USD             1.6525 | 1.6391

EUR/GBP             0.7880 | 0.7810

 

For today

  • EUR: The market in Asia has been dominated by GBP where the Euro is concerned, with the market dipping from the opening levels around 1.2920 to push through the 1.2900 areas as the EURGBP was sold strongly, the market gradually pushed back as the Cable’s rally became just that and less EURGBP however, Euro continues to struggle to gain any traction and given yesterday’s less than sterling TLTRO offering continues to undermine the market. Several speakers have been on the wire in the early hours including Schaeuble of Germany and Renzi of Italy, with warnings of increasing deterioration in economic conditions in Italy and more downside risk for Europe and the World economies as they meet in Cairns G20. Late EURGBP buying impacted the market with tall but the shouting over with in Scotland and the putting away of the film Braveheart until the next time at least however, which came first remains to be seen but Euro concerns now out weight the GBP. Topside offers intact from the 1.2930 areas with likely weak stops behind those levels, a push through will see further offerings from the 1.2960 levels and into the 1.3000 area with offers building the higher the market goes and with nothing but Europe’s economics and Geopolitical positioning in different areas of the world there would have to be some really good news. Downside bids though are likely to be quiet strong from the 1.2830 level until deep below the 1.2800 level with stops not really likely in any measure until an attempt through the 1.2760 areas opening a test through the 1.2700 not seen since 2012.
  • GBP: As the market opened around the 1.6400 levels the movement was slow to move as results were waited for, early suggestions put a massive turnout number for the vote and the market took that as a signal that No would likely get the upper hand. The initial move hit the 1.6450 level and what would have been a lightly offered area, it turns out it was better defended than one expected and profit taking from yesterday’s buyers saw good 2 way trading going through, as the market held the level and drifted lower awaiting actual results the buyers reappeared steadily moving the market off the 1.6420 levels this time it actually looked like the profit takers had moved back in to a long stance. The first few results were in line with expectations with one marginal area voting No and the market was sent quickly higher with the No vote some 150k votes in front before the big Glasgow result was received, while this was the third area to vote Yes and the independence/SNP waited patiently as this one vote could cut the lead significantly as it was the turnout was 75% as opposed to the rest being well above 80% and Glasgow’s Yes vote was only +30k ahead of the No’s and doing little to impact the lead. The market is now looking at the No vote a certainty with average voting at 45/55% to No. Cable just before the Glasgow vote had moved ahead trading quickly through the 1.6450 area and pushing to 1.6520 as Western isles voted No which was a marginal to Yes area, strong resistance and profit taking, as with the other move up it dipped back into the Glasgow vote before again pushing from 1.6480 to 1.6520 for the second time. As the market moves on other news slowly starts to impact and Euro’s starts to take over importance
  • JPY: A steady opening around the 108.70 level saw the market rising slightly into the Tokyo session and unlike usual days the market saw little movement into the fix and only once the GBP started to move did the USDJPY really start to move, strong GBPJPY buying as the votes started to hit pushing the USDJPY through the 109.00 area and triggering weak stops along the way to move quickly to above 109.40 before a small retracement to and currently holds around the 109.20 areas. Where from here, light support through the 108.80 level and into 108.60 before the market is likely to see any stops appearing with likely two way battle on a move lower through 108.40 however, the market is likely to open up to the downside from there and through the 108.00 levels with a market not particularly well defended unless yield players appear again. Topside option barriers cut to pieces on the moves through 109.00 to 109.40 with light offers from that point on. Offers building in size towards the 109.80-110.00 with likely fresh set of option barriers and no real stops to talk of. This rally is now getting a life of its own and although is underpinned by yield movement whether the Japanese economy can sustain the levels, are they still long from 2011 and below 80.00?
  • AUD: Oz drifted away from the 90 cent level s having briefly moved through the topside in early trading in Sydney before a steady drift lower as GBPAUD buying impacted the market, nothing too strong and the move into Tokyo pushed the Oz to 0.8980 before the Scottish independence vote started to truly impact the market and GBPAUD rose quickly and chased the Oz to the 0.8940 level just above the previous day’s lows before recovering a little as the market normalised a little. As the market moved into the grey hours it had recaptured 20 pips or so and is back into yesterday’s range. Downside bids around the 0.8940-30 area are likely to be followed by further bids from 0.8920 and into the 89cent level before giving way to weak stops and longer term cut-outs. Through the downside the market sees more bids showing up from bottom pickers and profit taking from longer term shorts and is likely to supported lightly from there into the 0.8850 level and then more strongly as the market makes a move through into the lower part of the congested area from January. Topside offers are now around the 90cent levels however, they are not likely to be too strong but one would have to watch the AUDJPY movement as I believe this is now going to be the focus with the AUDJPY maintaining some balance and forcing either the AUD/USD or the USDJPY legs to do the work, a move lower in USDJPY will allow the rise in the Oz and likely move to test weak stops through the 0.9030 level and onwards to 91 cent with little in the way to stop it.

Overnight News

GBP:

Scotland Rejects Independence as U.K. Wins Reprieve From Voters

JPY:

Japan Will Emerge From Economic Contraction, Abe Says in WSJ

Amari: Desirable FX Gradually Stabilizes and Reflects Economy

Abe Says He Wants to Review GPIF Portfolio as Soon as Possible

GPIF Considers Expediting Investment Strategy Change: Shiozaki

Kuroda: Don’t See Any Big Problems with Current FX Moves

Japan Cuts Sept. Economic Assessment on Weak Consumption

Japan Health Minister Poaches From BOJ for GPIF Reform: Nikkei

Most Japanese Cos. Prefer Stronger Yen, Reuters Survey Shows

USD:

Senate Passes Legislation to Aid Syrian Rebels, Fund U.S. Govt.

CNY:

China to See Trade Surplus for Several Years: PBOC Researcher

NZD:

New Zealand Recorded 4,710 Permanent Immigrants in August

New Zealand Consumer Confidence Increased in September, ANZ Says

 

Today’s data

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

JPY         All Industry Activity Index M/M Jul A -0.20% | C 0.40% | P -0.40%

06:00     EUR        German PPI M/M Aug C -0.10% | P -0.10%

06:00     EUR        German PPI Y/Y Aug P -0.80%

08:00     EUR        Eurozone Current Account (EUR) Jul C 14.3B | P 13.1B

12:30     CAD       CPI M/M Aug C -0.10% | P -0.20%

12:30     CAD       CPI Y/Y Aug P 2.10%

12:30     CAD       BoC CPI Core M/M Aug C 0.20% | P -0.10%

12:30     CAD       BoC CPI Core Y/Y Aug P 1.70%

12:30     CAD       Wholesale Sales M/M Jul C 0.80% | P 0.60%

14:00     USD       Leading Indicators Aug C 0.40% | P 0.90%

Harry Hindsight              

  • EUR: The Euro saw early selling from the opening with light EURGBP and EURJPY selling however, once the market moved into the Tokyo session the market started to trend higher and push through the 200DMA in the EURJPY and it pushed from below the lows of 1.2840 to above the 1.2870 before drifting towards the London session. Grey hours buying started the day and pushed through 1.2890 into the London open and a quick spike above the 1.2900 cleared much of the topside resistance around the 1.2900 area, the market then started to slip lower as EURGBP started to move lower as the Cable strengthened. With little tier one data the Euro was subject to the movements in both GBP and CHF with the rate announcement in line with expectations. The move into the NYK session saw the market move higher and into the resistance around the 1.2920 level and although it touched above the 1.2930 level into the closing period the market struggled to break cleanly and traded around the level for much of the session.
  • GBP: Cable traded quietly higher in Asia however, it was barely noticeable when compared with the rest of the day, the move into London saw the market move quickly from the 1.6260 levels just off the lows to move quickly to above the 1.6320 level as the new YouGov poll over previous polled people with numbers showing a switch from previous Yes votes to No. The move was quietly reversed into the London session. From here on the market moved gradually higher moving in waves first to the 1.6340 level and a spike to 1.6380 levels into the NYK open and then a touch through the 1.6400 level where the market remained in a tight range through to the close trading down to the 1.6360 level and maintain a 40 pip range.
  • JPY: USDJPY struggled higher initially from a 108.40 opening to just above the 108.60 levels before stalling in the face of EURJPY selling around the 139.80 areas and the 200DMA, the market drifted a little before starting a steady rise to the 108.80 level and the first level of suspected offers keeping a lid on the market. The move into London was a slow drift from the levels and as usual a steady stream of buying appeared on the dips to push into the NYK session and an attempt to push through the 109.00. The market then remained fairly static over the course of NYK with the UK dominating the market to a great extent either in driving traders away unwilling to take a risk while GBP buying increased from real money and short term players.
  • AUD:  A reasonable range over the day however the Oz could only make limited gains as it played a peripheral role to the market with crosses in EURAUD and GBPAUD dominating the flows somewhat. It dipped from the opening 0.8960 however, as with previous moves this week the downside moves have been limited and the market continues to gravitate back to the 90 cent level and today was no different. A couple of dips, the first into London saw the market sold from the 0.8975 area into 0.8940 before recovering and then another dip into the NYK opening before again recovering and making slightly higher mark for the day just short of 90cent.

Yesterday’s premiership results

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

CHF        Trade Balance (CHF) Aug A 1.39B | C 2.56B | P 3.98B | R 3.90B

CHF        SNB Rate Decision A 0.00% | C 0.00% | P 0.00%

GBP       Retail Sales M/M Aug A 0.40% | C 0.40% | P 0.10% | R 0.00%

GBP       CBI Trends Total Orders Sep A -4 | C 9 | P 11

CAD       International Securities Transactions (CAD) Jul A 5.30B | C 2.47B | P -1.07B | R -1.08B

USD       Initial Jobless Claims (SEP 13) A 280K | C 312K | P 315K | R 316K

USD       Housing Starts Aug A 0.96M | C 1.04M | P 1.09M | R 1.12M

USD       Building Permits Aug A 1.00M | C 1.04M | P 1.06M | R 1.06M

USD       Philly Fed Survey Sep A 22.5 | C 22.1 | P 28

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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