Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 123.423 | EURUSD 1.1001 | AUDUSD 0.74057 | NZDUSD 0.66919 | USDCAD 1.2740 | USDCHF 0.95009 | GBPUSD 1.54859 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.74 | 123.39

EUR/USD             1.1013 | 1.09735

EUR/JPY               136.00 | 135.75

AUD/USD            0.7432 | 0.7388

NZD/USD             0.6694 | 0.6667

USD/CAD             1.2764 | 1.2734

EUR/CHF              1.0465 | 1.0446

USD/CHF             0.9532 | 0.9497

GBP/USD             1.5492 | 1.5472

EUR/GBP             0.71075 | 0.7094
For Today

• EUR: Tsipras facing Syriza mutiny, QE continuing in the Eurozone and the US rate rises the Euro through the Asian session was a dull affair, again. Moving from the opening levels just above the 1.1000 levels dipping into the Tokyo session to trade briefly through the 1.0980 before quietly moving back to the opening levels with limited volume through the session. Topside light offers from the 1.1080 areas and into the 1.1100 are likely to be quickly cleared and a push to the 1.1140 areas likely to become a stronger level but only just with 1.1180-1.1200 the better offers, congestion through the 1.1230-50 areas is likely to slow any further movement if the market were to trade higher however, all of the above are likely to stand in the way as the market bides it’s time to focus on the next few days. Downside bids as has been seen are limited through the 1.0980 and a move into 1.0970 is likely to see weak stops appearing in the market and the market opening for a test to the 1.0900 levels and an opening to a possible deeper move into the 1.0800 level however, while normal service could be a possibility I would not put the Greek saga to bed just yet.
• GBP: Cable tracked the Euro for the most part dipping from the opening 1.5490 areas to push into the mid 1.5470’s before rising back to the opening levels and then trading in a narrow 1.5480-90 levels. Inflation numbers today will be eagerly watched for a rise from the current 0.01% levels, topside offers are weak at best with a push to the 1.5600 before some resistance is likely to appear, a push through the level will likely see light stops and only minor congestion from then to the 1.5700 levels and then stronger offers around that areas. Downside bids light into the 1.5450 areas with no real strong levels until the market opens up below 1.5400 and the recent lows through 1.5350 come into play. So good or bad the market has potential in either direction for decent moves.
• JPY: USDJPY opened around the 123.50 areas and rose quietly to push above the 123.70 area before drifting back again and holding around the opening levels through the grey hours. Topside offers through the 123.80 level are likely to continue through 124.00 areas with the offers continuing through the level and the possibility of weak stops likely to cause further spikes towards the 124.50 a push through this level though will open a new test of 125.00 area and the possibility of a weaker Euro could give USD’s he impetus. Downside bids light into the 123.00 levels and the market remains weak until moving into the 122.00 areas with the downside cleared down to the 120.50 areas last week possibly not being refreshed for a major push.
• AUD: The Oz drifted from the opening around the 0.7410 levels falling back to the 0.7390 levels before the release of a better NAB confidence number gave the market the boost it needed and a quick rise through to the 0.7430 areas, from there the market held quietly to trade around those levels. Topside offers weak into the 0.7470 area with the offers increasing into the 0.7500 levels with a possible break here triggering weak stops and only light offers in the mix, a push through the 0.7540-60 levels will likely open the topside up for a test to the 0.7650 levels with only light offers continuing in to the stronger levels.

Overnight News                                                                                                                         

EUR:

IMF Says Greece Misses 456 Million Euro Payment Due Monday

Greek Government Repays Samurai Bond Due Today, Debt Agent Says

Schaeuble Proposes Debt Certificates for Greece: Handelsblatt

Tsipras Govt. Weighs Resigning After Wed Parliament Vote: Bild

OIL:

Diplomats Said to Prepare Iran Nuclear Agreement Documents

CNY:

China’s Foreign-Exchange Reserves Drop to Lowest Since 2013

China’s Credit Growth Beats Projections After Monetary Easing

JPY:

Japan Civil Service Fund Boosts Domestic Stocks to 13% of Assets

Toshiba Panel to Say Account Irregularity Intentional: Yomiuri

GBP:

U.K. LFL June Retail Sales Up 1.8 Y/y, BRC Says

AUD:

Australian Budget Forecasts on Chinese Economy Unchanged: Hockey

Australia ANZ Weekly Consumer Sentiment Falls 3.6% to 107

Australia June Business Confidence Rises 2 Pts M/m to 10

Today’s data

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

GBP       BRC Retail Sales Monitor Y/Y Jun A 1.80% | P 0.00%

AUD       NAB Business Confidence Jun A 10 | P 7 | R 8

06:00     EUR        German CPI M/M Jun (F) C -0.10% | P -0.10%

06:00     EUR        German CPI Y/Y Jun (F) C 0.30% | P 0.30%

07:15     CHF        Producer & Import Prices M/M Jun C 0.20% | P -0.80%

07:15     CHF        Producer & Import Prices Y/Y Jun P -6.00%

08:30     GBP       CPI M/M Jun C 0.10% | P 0.20%

08:30     GBP       CPI Y/Y Jun C 0.00% | P 0.10%

08:30     GBP       Core CPI Y/Y Jun C 0.90% | P 0.90%

08:30     GBP       RPI M/M Jun C 0.10% | P 0.20%

08:30     GBP       RPI Y/Y Jun C 1.00% | P 1.00%

08:30     GBP       PPI Input M/M Jun C -0.80% | P -0.90%

08:30     GBP       PPI Input Y/Y Jun C -11.80% | P -12.00%

08:30     GBP       PPI Output M/M Jun C 0.10% | P 0.10%

08:30     GBP       PPI Output Y/Y Jun C -1.50% | P -1.60%

08:30     GBP       PPI Output Core M/M Jun C 0.00% | P 0.00%

08:30     GBP       PPI Output Core Y/Y Jun C 0.10% | P 0.10%

08:30     GBP       DCLG UK House Prices Y/Y May C 5.90% | P 5.50%

09:00     EUR        Eurozone Industrial Production M/M May C 0.20% | P 0.10%

09:00     EUR        German ZEW (Economic Sentiment) Jul C 30 | P 31.5

09:00     EUR        German ZEW (Current Situation) Jul C 60 | P 62.9

09:00    EUR       Eurozone ZEW (Economic Sentiment) Jul C 51.1 | P 53.7

12:30     USD       Advance Retail Sales Jun C 0.30% | P 1.20%

12:30     USD       Retail Sales Less Autos Jun C 0.60% | P 1.00%

12:30     USD       Import Price Index M/M Jun C 0.30% | P 1.30%

14:00    USD       Business Inventories May C 0.20% | P 0.40%

Harry Hindsight                   

• EUR: After opening a little lower from Friday’s close the market moved into the Tokyo session filling the gap and moving off the 1.1110 areas and pushing to the 1.1140 levels and this more or less set the range for the Asian session. The run to London saw the market edging slightly higher and once the meeting in Europe ended and a unanimous agreement was reached the market quickly rose towards the 1.1200 areas not quiet breaking the level however, then came the details and while this will put off the inevitable for the moment but the details saw the market dropping quickly back as the total capitulation of the Greek PM left parts of the market shocked by the brutality of the creditors, with analysis from some suggesting the agreement has damaged the reputation of the Eurozone project and suggestions of the heavy hand possibly spreading as the central states become the greater of equals, the counter argument of course is that those same countries have continued to fund the Greeks each successive time and watched as they either did not change as agreed or deliberately side stepped the issues, in either case the market dropped quickly back from the highs and traded down to the 1.1060 levels. With some stating the move is connected to the above and others stating that now the Greek situation has been managed USD and the future rate rise comes to the forefront however, the situation as we know is not over as Tsipras has to push this through three separate votes to become law and I’m sure that is not going to be easy. London held the 1.1060 areas into the NYK session and a slow drift lower with limited volumes until the market moved into the 1.1000 areas for the close dipping only slightly through the area.
• GBP: Tight trading through Asia with the market moving off the 1.5500 areas several times to test the 1.5520 levels in limited action, the move into the London session saw the same quick rise with the Euro pulling Cable higher pushing initially to the 1.5550 areas, the drop back of the Euro initially dragged the GBP with it however, as the Euro accelerated lower EURGBP selling kicked in having briefly moved to above the 0.7200 level the market quickly dropped back with the falling Euro to the 0.7110 levels, this consequently pushed GBP the less liquid currency higher pushing Cable to the 1.5590 areas before the GBP buying was completed Cable again reversed its move and dipped back to the 1.5530 levels before slowly declining through the session with the Euro to drop to the 1.5480 levels into the close.
• JPY: Opening around the 122.40 levels and some 40 pips lower the market quickly filled the gap before drifting back towards the lows, EURJPY was again the largest loser on the opening and this kept the USDJPY pinned to the 122.50 levels and rising through the Asian session towards the 122.70 levels and a quiet move into the London session, the initial move of the Euro saw the EURJPY buying move in and the rally for USDJPY started however, as the Euro lost its shine the USD took over and the USDJPY pushed quickly through the 123.00 levels with only a minor blip before continuing to rise to the 123.50 levels and that was the end of the rally with the market running out of steam and the USDJPY trading in the 123.30-50 areas in a long drawn out run to the close.
• AUD: With a better China exporter number the Oz was the only really independent currency we talk about in this piece with the market struggling from the opening around the 0.7420 level and edging higher on the numbers to quickly push to the 0.7470 levels before dipping back to the 0.7440 areas, the move in the grey hours saw another attempt higher to fail again and the opening in London saw strong selling from the usual early players and EURAUD cross being sold more aggressively than the bids in Oz could support and the market dipped through the opening levels, it recovered a little before the market in NYK saw USD buying and the Oz was pushed down to below the 0.7390 levels before holding around the 0.7410 areas to the close.

Yesterday’s premiership results

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

CNY        Trade Balance Jun A $46.61B | C $56.35B | P $59.49B

JPY         Industrial Production M/M May (F) A -2.10% | C -2.10% | P -2.20%

JPY         Tertiary Industry Index M/M May A -0.70% | C -0.20% | P -0.20%

USD       Monthly Budget Statement Jun A $51.8B | C $50.5B | P $70.5B

Good Luck,

Andy

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