Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 107.84 | EURUSD 1.26906 | EURJPY 136.854 | AUDUSD 0.87822 | NZDUSD 0.78628 | USDCAD 1.11847 | EURCHF 1.21128 | USDCHF 0.95442 | GBPUSD 1.61161 | EURGBP 0.78745 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               107.98 | 107.65

EUR/USD             1.2716 | 1.2680

EUR/JPY               137.06 | 136.67

AUD/USD            0.8783 | 0.8747

NZD/USD             0.7878 | 0.7849

USD/CAD             1.1200 | 1.1176

EUR/CHF              1.2116 | 1.2108

USD/CHF             0.9548 | 0.9528

GBP/USD             1.6135 | 1.6116

EUR/GBP             0.78815 | 0.7870

 

For today

  • EUR: A slow start to the day with the market a little confused over which direction is the most suitable, dovish commentaries from the US one day and then the Europeans the next tends to do that and I should have put money on it. The market opened around the 1.2690 levels and some 20 pips off the lows of yesterday, early traders initially sold EURJPY before the market moved into the Tokyo session, and the USDJPY trading steadily lower the Euro was quickly able to regain the incentive and push through the 1.2700 levels from the lows of 1.2680 moving to highs in the 1.2715 area the market saw the EURJPY push through 137.00 however, sellers appeared in earnest to push it back lower and both the USDJPY and Euro’s moved lower with little trouble in either. Topside light offers into the 1.2720 level have been well traversed over the past 24hrs but a break back through the 1.2730 levels will likely see weak stops and another attempt to the topside. Very little data to influence the day and any move is likely to be gradual unless the ECB or FED make speeches to the masses. From there 1.2800 has sufficient offers around to hold a normal market one suspect with better stops through the 1.2820 levels. Downside is less exciting with plenty of congestion expected, bids from the 1.2680 likely, with nothing too large probably but plenty of it all the way to the 1.2620 levels, a strong move through 1.2580 will probably cause a little bit of a stir and open up a fresh attempt to test the 1.2500 handle however, that will in all likelihood be a step to far for a Friday, but strong bids are likely.
  • GBP: Cable well what can I say; a very quiet session for GBP with the market anchored to the 1.6120 level for most of the session, a quiet move to above the 1.6130 during midsession saw the market drift off and back to where it started. Very light bids into the 1.6100 levels and a move through the level will likely see the better bids (still not large) around the 1.6060 under threat, 1.6040 holds the short term key to any further declines and a strong push through again opens up a move to the 1.5960 levels and strong interest. To the topside sees a good expanse of open space running through from 1.6140 offers to strong 1.6200-20 levels seen yesterday. Visible trade balance holds the key to where it’s likely to go however, with a neutral number one suspects that it will be pulled around by the Euro.
  • JPY: USDJPY remained in a reasonably tight range trading from the opening 107.80 to just below the 108.00 level in pre-Tokyo only to drift back lower as AUDJPY selling continued albeit a lot lighter than in NYK, USDJPY was therefore on the back foot for most of the session however, the 107.70 area provided the limited support required to hold the market from a deeper move. Bids from the 107.70 and into 107.50 before light stops appear temper this with the likely continuation of yield buying which seems to be all I ever talk about with the margin calls having run its course downside pressure is likely to be much reduced at the current levels. Topside is well travelled now and the market only likely to see light offers into the 108.20-30 areas before opening up for another move to the 108.70-80 better offers, even then offers continue for a good distance through the 109.00 level.
  • AUD: The Oz had a pretty quiet session with some reasonable carry trade selling early on taking the Oz from the opening levels around the 0.8780 level to trade to 0.8760 into the Tokyo opening, this was then balanced for a period with Oz buying against the carry however, USDJPY weakness and concerns about Chinese punitive taxes on coal imports likely to provide some carry over into the London session. The market eventually made a low around the 0.8750 areas before moving back steadily to the opening levels in a typical Friday trading session. Topside light offers into the 88cent levels and then the market is open with patches of offers to 89 cent and stronger offers. The downside has light bids from here to a stronger 0.8740 area before giving way to light stops and the market opening to mixed interest down to 87 cent. Through there the market is likely to be a little more choppy and 0.8660 level is the key break down point give or take a few pips.

 

Overnight News

JPY:

Some Bank of Japan Members: Breakeven Rates Declining Recently

IMF’s Shinohara Urges BOJ to Be Pragmatic on Inflation Timeframe

Weak Yen’s Net Economic Impact Is Negative: Abe Critic Noguchi

Japan Govt to Allow Hokkaido Electric to Raise Rates: Obuchi

EUR:

Weidmann Says ECB Balance-Sheet Target May Lead to Risk Transfer

Schaeuble Says German Government Will Review Growth Forecast

AUD:

RBA’s Edey Seeing Some Concentration of Risk-Taking in Economy

Australia Aug. Home-Loan Approvals Fell 0.9% M/M; Est 0.2% Rise

AUD/CNY:

Abbott Says China Coal Tariffs a ‘Hiccup’ in Trade Relationship

CNY:

Beijing Won’t Likely Remove Home Purchase Curbs: Sec. News

PBOC Loosens Control of Loans for Property Development: Observer

GBP:

U.K. Independence Party Wins First Elected Parliament Seat

 

Today’s data

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

JPY         Tertiary Industry Index M/M Aug A -0.10% | C 0.20% | P 0.00%

AUD       Home Loans Aug A -0.90% | C 0.20% | P 0.30%

JPY         Consumer Confidence Sep A 39.9 | C 42.2 | P 41.2

08:30     GBP       Visible Trade Balance (GDP) Aug C -9.6B | P -10.2B

08:30     GBP       Construction Output M/M Aug C 0.50% | P 0.00%

12:30     CAD       Net Change in Employment Sep C 20K | P -11.0K

12:30     CAD       Unemployment Rate Sep C 7.00% | P 7.00%

12:30     USD       Import Price Index M/M Sep C -0.60% | P -0.90%

 

Harry Hindsight              

  • EUR: Euro had a reasonably nice range over the course of the day, with the market opening around the 1.2730 levels and moving to above 1.2750 in early Tokyo before becoming range bound holding between 1.2720-50 into the grey hours. Volumes were reasonably healthy as the market attempted to break out to the topside, Middle East forced the market through the 1.2750 levels before early Europeans moved in as the market moved into the grey hours to pin it back. German trade figures came in weaker than expected and the market dipped pre-London. With the near offers removed from the market the London session saw strong buying moving in almost immediately taking the Euro to just above the 1.2790 levels as USDJPY dropped and support in the EURJPY just below 137.50 buoyed the Euro leg, this was the only real attempt higher for the Euro and although the market moved into the NYK session holding the 1.2760 levels with another brief attempt above 1.2780 the market was then consigned to moving quickly lower as Draghi raised concerns on Eurozone growth, call me cynical but the timing is a little bit suspicious following on the heels of the FOMC. The market quickly gave up its gains falling to the opening ranges before breaking through as the NYK session kicked in. The release of the Initial claims number in the US did further damage and the market was steadily pushed to below the 1.2670 levels before steadying and holding the 1.2690 into a quiet close.
  • GBP: Not so volatile as the Euro the early part of the session saw the Cable rising steadily, opening around the 1.6160 areas the market dipped only slightly before trading into the London session having failed for the first time on an attempt at 1.6200. The move into the grey hours saw strong EURGBP buying move into the market forcing the GBP leg lower and Cable held the opening 1.6160 levels into the official opening. The worse than expected German trade balance went the EURGBP back from the 0.7895 highs and although it held 20 pips lower the market in the cross was sufficient to force Cable through that topside resistance and eventually into the NYK session to slightly above the 1.6220 levels. The EURGBP never recovered and remained on the back foot for the day however, the fall off of the Euro dragged on the Cable and although the market was not overly volatile over the course of the day once the NYK session took over and the initial claims numbers were released the USD was better bid across the board if only marginal in some of the pairs. Cable moved down sharply through the 1.6160 levels triggering weak stops to the 1.6140 level and then moving to trade for the balance of the session around the 1.6120 levels into the close.
  • JPY: USDJPY traded sideways from the opening 108.10 level briefly moving to above the 108.30 areas before following through and pushing down into the 107.90’s in late trading once all the end of week USD buying was exhausted. The market held the supportive areas into the opening of London before the London market sold triggering weak stops through the 107.80 levels and into the waiting yield buyers around 107.70. The market then saw the yield buyers again however, even into the NYK session the selling continued to push into those buyers and the initial rally after the initial claims release was again sold into and the market ran to the close for the most part below the 108.00 level having pushed to the 107.55 areas with steady selling of the AUDJPY cross doing the most damage.
  • AUD: Early trading was quiet into the lead up to the Employment figures, the release was pretty much as expected with large revisions to both the August and July and the figure for Sep down. The market reacted as EA’s/algo’s jumped on the news and the market moved from the opening 0.8840 levels straight to 0.8790 and then snapping immediately back as the market took advantage of the poor assumptions of the electronic gizmo’s, within seconds the market was pushing back through the opening and triggering weak stops and EA’s and Algo’s struggled to buy their shorts and the market moved through the 0.8850 levels, with the awaited correction to Augusts Employment number out of the way the Oz continued to gain ground with the AUDJPY carry trade remaining intact around the 95.80 levels and the USDJPY falling, Oz was forced to just short of the 89 cent level into the London session and held for the move into NYK. US initial claims turned the market for the USD and with the USDJPY unable to rise to far the AUDJPY carry started to come off leading the way for the Oz with strong carry trade selling hitting the market the Oz moved off the 0.8880 levels in pre-release markets before breaking down through the opening levels and triggering weak stops through the 0.8820 levels to quickly test through the 88 cent levels, although the market slowed its descent it was not was not finished until the market had touched through the 0.8770 levels and AUDJPY had dropped some 130 pips on the day triggering margin calls in the retail sector.

 

Yesterday’s premiership results

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

GBP       RICS House Price Balance Sep A 30.00% | C 38.00% | P 40.00%

JPY         Machine Orders M/M Aug A 4.70% | C 1.10% | P 3.50%

AUD       Employment Change Sep A -29.7K | C -29.6K | P 121.0K | R 32.1K

AUD       Unemployment Rate Sep A 6.10% | C 6.20% | P 6.10% | R 6.00%

JPY         Machine Tool Orders Y/Y (SEP P) A 34.80% | P 35.50%

EUR        German Trade Balance (EUR) Aug A 17.5B | C 18.4B | P 22.2B

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target Oct A 375B | C 375B | P 375B

USD       Initial Jobless Claims (OCT 4) A 387K | C 291K | P 287K

CAD       New Housing Price Index M/M Aug A 0.30 % | C 0.20% | P 0.00%

USD       Wholesale Inventories Aug A 0.70% | C 0.30% | P 0.10%

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.