Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 108.422 | EURUSD 1.26684 | EURJPY 137.354 | AUDUSD 0.88028 | NZDUSD 0.78888 | USDCAD 1.11567 | EURCHF 1.20858 | USDCHF 0.95405 | GBPUSD 1.61449 | EURGBP 0.78465 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               108.955 | 108.36

EUR/USD             1.2676 | 1.2652

EUR/JPY               137.87 | 137.345

AUD/USD            0.8805 | 0.8774

NZD/USD             0.7910 | 0.7851

USD/CAD             1.1176 | 1.1156

EUR/CHF              1.2089 | 1.2083

USD/CHF             0.9553 | 0.9532

GBP/USD             1.6159 | 1.6126

EUR/GBP             0.7848 | 0.78395

 

For today

  • EUR: As non-farm payrolls looms the market is not that different to yesterday with the market flattening position in the run in. Having opened around the 1.2670 level you would have been mistaken in thinking that the Asian session would have continued the move and pushed for the 1.2700 levels however, it didn’t and the market reverted to USD buying again, with long Euro positions turned and the market leaving itself looking for further good news from the US. It wasn’t so dramatic and the volumes were down compared with the past few weeks but there was a steady stream as the Euro ticked down through 1.2660 and resting in the mid 1.2650’s for a good portion of the session. Topside offers around the 1.2700 level remain in play added to which top pickers likely to be waiting for any rally they can fade. A move through 1.2720 is likely to waken the market and with impetus a move through 1.2740 will see light stops challenged and a push open to 1.2800 but that’s on a really bad NFP number. Downside bids are at the current levels and seem to have some depth to them with stronger bids through to 1.2600 levels, even through that level the market still remains bid with nothing particularly strong until a move through the 1.2580 levels then the bids again start to increase as we reach the recent lows.
  • GBP: Cable has lost a little ground from the opening outperforming the Euro only slightly with the cross dipping from the 0.7850 areas to the 0.7840 levels, Cable having opened around the 1.6145 level only briefly moved to the topside to around the 1.6160 level before a steady decline started to run the market to the current 1.6130 levels were the market has sat for several hours. With the services PMI number to pay attention to one can only suppose that a lightening of positions has moved through the market. Downside has seen willing buyers on this low level however, a move through the 1.6110 level is likely to see weak stops this in turn will in all likelihood trip into further stops through 1.6100 before meeting sufficient buyers to hold the market in check, that is if the PMI isn’t a complete mess or NFP is not a massive number. Below 1.6100 the bids extend down into the 1.6050 area a break here though will instantly open the 1.6000 level with potential light option plays and a realistic medium term view of returning to a 1.58-1.54 range over the coming weeks, but it does have to break that 1.6000-1.5950 level first. Topside now sees light offers from the 1.6160 level and slightly better offerings through 1.6180 before the market has freedom to move back above 1.6200 and maybe a fresh test through the 1.6250 levels, number depending. So potential for a good move in either direction, of course chances are the number will be in line and I’ve therefore wasted my finger tapping.
  • JPY: The USDJPY recovered lost ground through the session today, with strong buying as soon as the Tokyo session opened taking the market from the stalled 108.40 levels the market had seen since NYK’s close to rise steadily through the session to above the 108.95 level and into light offers. The market has continued to range around the 108.80-90 level since that point and seems to be more expectant of a good NFP number than the other majors. Topside offers are light through the 109.00 level and into slightly better offers to 109.20, a break here opens up the topside again for another test to 110.00 however, there are likely to be profit takers and light sellers all the way up to the stronger offers from 109.80 onwards. The market really has to push through the 110.20-30 areas to get amongst any real stops and one suspect that option plays around those levels remain. Downside is open to the 108.40 level where the first level of light bids are, through there nothing special until the better bids appear 108.10 and downwards. As mentioned every day for a couple of weeks now Yield buyers are likely to pick up the mantle on dips. While Kuroda is the other side of the fence now having been the EconMin at one time and now heading up the BoJ it’s amazing how his rhetoric has changed however, he is not concerned with the current rates of exchange and this will have no effect on the economy, ( just the debt servicing for the MoF).
  • AUD: The major move was yesterday and the market has struggled to maintain the 88 cent level however, saying that it’s not moved that far away from the level either and has roughly traded the 0.8780-0.8800 range for the day so far. Offers through the 0.8820 area moving into light stops on a break through the 0.8850 level. From there the market is a little patchy with offers appearing every 20 pips or so, and it will be a grind higher and slow going notwithstanding the NFP. Downside has some limited bids around the 0.8700 area with the bids building until the key level 0.8660 where strong bids or suspected. Though 0.8640 the game is over and the market open for a far deeper move lower.

 

Overnight News

JPY:

Kuroda: Don’t Think Weak Yen a Minus for Japan Economy Overall

Japan Announces Steps to Help Small Cos with Rising Input Costs

Abe Says Japan Must Support Smaller Cos. Coping With Weak Yen

GPIF Portfolio Needs Reform as Soon as Possible, Shiozaki Says

BOJ Buys 3.5 Trillion Yen in Treasury Bills, Most on Record

Markit/JMMA  Japan Sept. Composite PMI 52.8 vs. 50.8 in Aug.

BOJ Could Scrap Time Frame of 2 Years for Price Target: Muto

Japan May Require Employers to Enforce Time Off, Nikkei Reports

More Economists Expect BOJ to Avoid Boosting Stimulus: Survey

USD:

Bullard Not Worried by Dollar Impact on Growth at Current Value

CNY:

China Sept. Non-Manufacturing PMI Falls to 54 in September

China Property Easing to Boost Sales, May Cause Bubble: Fitch

AUD:

Australia’s Aug. Private New Home Sales Rise 3.3% M/m

Australia Sept. Services Index Falls 4.0 Pts to 45.4

 

Today’s data

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

CNY        Non-manufacturing PMI Sep A 54 | P 54.4

07:45     EUR        Italy Services PMI Sep C 49.6 | P 49.8

08:00     EUR        Eurozone Services PMI Sep (F) C 52.8 | P 52.8

08:30     GBP       Services PMI Sep C 59 | P 60.5

09:00     EUR        Eurozone Retail Sales M/M Aug C 0.10% | P -0.40%

12:30     CAD       International Merchandise Trade (CAD) Aug C 1.50B | P 2.58B

12:30     USD       Trade Balance Aug C -$40.7B | P -$40.5B

12:30     USD       Change in Non-farm Payrolls Sep C 210K | P 142K

12:30     USD       Unemployment Rate Sep C 6.10% | P 6.10%

14:00     USD       ISM Non-Manufacturing Composite Sep C 58.5 | P 59.6

Harry Hindsight              

  • EUR: After a tentative move higher during the Asian session trading from the opening 1.2620 levels the market moved into mid-Tokyo with the market taking back short positions either as a take profit or position flattening into the upcoming ECB announcement. The market ran steadily to the 1.2650 areas before weak stops were triggered and a quick move to above the 1.2670 levels before drifting back slightly in the move to the grey hours. Early Europeans were steady sellers into the London opening and the market moved back to its opening levels. The market in London ranged quietly through the PPI figures moving off the 1.2620 level to trade between the 1.2630-40 levels until the announcement from the ECB. While the market moved initially down to below the 1.2620 level before shooting up to just above the 1.2690 levels the whole thing was really a non-event for the FX market with the focus more in debt instruments as buying of private sector assets is to start or so they say. Euro’s topped on the first rise just above the 1.2690 level running into some reasonably strong profit taking from what longs there were in the market before dropping quickly back into the 1.2630 area, the next move up was more of a steady move higher after the release of poor Factory order numbers in the US and again the market eventually tested through the 1.2690 this time only just short of 1.2700. The failure for the second time sent the market scurrying lower into the 1.2670 areas and a slow move to the close around that area.
  • GBP: From the opening the Cable was little different to the Euro rising slightly initially from the opening 1.6180 level and a steady push to the 1.6200 levels before rallying quickly as the short covering entered the market and running the market to just off the 1.6250 level. From there though the bulk of the day was a steady movement to the downside, with only the PMI construction number the market had little to go on, the supportive tone of the EURGBP cross also weighed on the GBP and the market slipped steadily to the 1.6130 levels as the Cross moved firmly through 0.7800 and on its way to the 0.7850 areas before drifting off a little into the close. Cable stabilized below the 1.6120 levels and the market moved slowly back through to the 1.6140-50 levels in a quiet close to the day.
  • JPY: While the USDJPY continued to ease off through the session the movement was less pronounced that the previous session or that of the other major’s. Opening around the 109.00 levels the market initially headed a little higher before falling back as the Euro in particular started to rally, this set in motion a general easing in the USD and the USDJPY slipped back to the 108.60 levels into Tokyo. With the move done with the market again moved back to just short of the opening levels and into the grey hours. Movement in the Euro helped to lead the JPY along and again the USDJPY moved down this time to the 108.40 levels which held for the best part of the London session and only dipped when the US numbers were released. The push through the 108.20 level met plenty of willing buyers as the Yield players entered the market again buying USDJPY back to the 108.40 in a less convincing style we’ve seen over the past few weeks but at least they are still paying attention. The close was a quiet affair given the amount of volume seen on the day which was above normal in relation to the past year at least.
  • AUD: The early gains for Oz were not repeated with the ECB announcement and only a limited reaction to the US factory number. Moving in the early part of the session with Oz numbers looking a little more healthy, the Oz moved off the opening 0.8730 areas pushing steadily higher into the Tokyo session and triggering a few weak stops on the break through the 0.8770 level to push to above the 88 cent level, having reached 0.8815 areas the market stalled and although it didn’t back off there was insufficient interest to keep the market moving and the market held those levels for a few hours into the grey period before London. Early range players were quick to sell from the London opening but the downside was now limited with fresh bidders moving into the 0.8770 levels. Through into NYK the market based off this level with a couple of fresh attempts higher meeting the same reaction until the NYK option cut where the market saw gamma traders altering their positions and a quick spike through the offers to touch above the 0.8825 levels before slowly drifting to the 88 cent level close.

 

Yesterday’s premiership results

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

JPY         Monetary Base Y/Y Sep A 35.30% | P 40.50%

AUD       Trade Balance (AUD) Aug A -0.79B | C -0.78B | P -1.36B | R -1.08B

AUD       Building Approvals M/M Aug A 3.00% | C 1.00% | P 2.50% | R 2.10%

GBP       Construction PMI Sep A 64.2 | C 63.5 | P 64

EUR        Eurozone PPI M/M Aug A -0.10% | C -0.10% | P -0.10% | R -0.20%

EUR        Eurozone PPI Y/Y Aug A -1.40% | C -1.20% | P -1.10% | R -1.30%

USD       Challenger Job Cuts Y/Y Sep A -24.40% | P -20.70%

EUR        ECB Rate Decision A 0.05% | C 0.05% | P 0.05%

USD       Initial Jobless Claims (SEP 27) A 287K | C 299K | P 293K | R 295K

USD       Factory Orders Aug A -10.10% | C -9.00% | P 10.50%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.