Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 124.091 124.01-02 | EURUSD 1.08297 1.0836-39 | AUDUSD 0.73736 0.7370-82 | NZDUSD 0.65228 0.6517-28 | USDCAD 1.29735 1.2980-85 | USDCHF 0.96182 0.9605-21 | GBPUSD 1.56055 1.5604-05 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               124.20 | 123.96

EUR/USD             1.08435 | 1.08205

EUR/JPY               134.53 | 134.35

AUD/USD            0.7380 | 0.7328

NZD/USD             0.6564 | 0.6505

USD/CAD             1.2999 | 1.2973

EUR/CHF              1.0428 | 1.0414

USD/CHF             0.9633 | 0.9609

GBP/USD             1.5610 | 1.5583

EUR/GBP             0.6945 | 0.6939

For today

• EUR: The Euro made early headway liming from the opening levels to trade above the 1.0840 levels before slipping from those highs to test towards the 1.0820 levels in quiet trading, topside offers light into 1.0850 levels with the market opening for a test of the 1.0900 areas with better offers likely to be from there until around the 1.0930 levels with possible weak stops however, offers quickly take over and the market is likely to struggle through the 1.0950 areas until reaching a possibly stronger 1.1000. Downside bids into the current levels and to the 1.0800 areas before the possibility of break out stops through the levels to open up a test to the 1.0740 areas and possibly the last thing protecting the 1.05 handle.
• GBP: Cable limped along in a quiet session holding the opening levels to range 1.5600-10 for much of the session before the market broke lower as the Gold passed through stops and dragged Cable only through to the 1.5590 levels with a minor dip into the 1.5580’s before holding in the 1.5590 levels for the rest of the session into London. Topside offers are weak until the market moves towards the 1.5670-1.5700 areas with some reasonable offers likely, even through the 1.5700 areas the market is still likely to be congested to the 1.5750 areas with stops of size likely on a strong break through 1.5800 and the rest lost in the congestion. Downside bids likely into the 1.5550 areas with the possibility of weak stops through those levels and opening the market for a move towards the 1.5450 areas, a strong break here opens the market of a another test of the months lows through 1.5350.
• JPY: USDJPY traded quietly as you’d expect for a bank holiday moving quietly high to test towards the 124.20 areas over the course of the session in very light trading. Topside offers from the 124.20 areas likely to continue to the 124.40 before weak stops appear and then further offers into the 124.50 levels likely to be weak, a move to 124.80 sees better offers again however, it’s a bank holiday and those may be under pressure on a strong move. Downside bids into the 123.80 levels likely to give way to weak stops on a move through the 123.70 levels and an opening to test into the 123.20 area bids.
• AUD: The Oz drifted quietly through the Asian session with no Tokyo the market drifted from the opening 0.7380 to the 0.7370 areas before the Gold selling hit the market, a combination of a Japanese bank holiday a move through the lows in 2014 in the front month futures saw the market quickly drop from 1129 in spot to 1102 areas, then a pause before again starting and dropping back to the 1080 levels before moving steadily back to 1110 levels, the Oz was also caught by this move and dropped quickly to the 0.7350 areas and then followed through later into the session to trigger weak stops through those levels and trade to just below the 0.7330 level and lows not seen since 2009. There was a bounce as the Gold recovered so did the Oz pushing back towards the 0.7360 areas into the grey hours. Downside bids likely to be reasonably strong into the 73 cents area however, a push through could see stops appearing quickly and the market opening for a test to the 0.7240 areas. Topside offers likely into the 0.7380 areas with those offers possibly opening to stops on a move back through the 74 cent levels however, with little data for the day the market is likely to remain quiet for the pair unless there is further movement in the Gold.

Overnight News

CNY:

Vice FinMin Zhu Guangyao confident to achieve 2015 GDP target and sustain 7-8% growth over 5yrs

Authorities to investigate aggressive short selling in equities, said by detractors to be scare tactics

Today’s data

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

GBP       Rightmove House Prices M/M Jul A 0.10% | P 3.00%

06:00     EUR        German PPI M/M Jun C -0.10% | P 0.00%

06:00     EUR        German PPI Y/Y Jun C -1.40% | P -1.30%

08:00     EUR        Current Account (EUR) May C 23.1B | P 22.3B

12:30     CAD       Wholesale Sales M/M May C 0.00% | P 1.90%

 

Weekend News

EUR:

Greek PM Tsipras replaced some ministers in a cabinet shuffle

Greek banks will re-open Monday

Merkel said she was willing to entertain re-profiling of Greek debt in time

FinMin Schauble hints at his resignation in an interview over the Greek bail out.

Eurozone is ready to start formal talks on the Greek bailout.

JPY:

Abe’s government continue to lose support as approval ratings drop again.

Gold:

WSJ article likens Gold to a Pet Rock, saying the asset has no real benefit or value.

Harry Hindsight

• EUR: With volatility reduced from the past few weeks of gaps to start the week today saw nothing but light volumes however, the Euro with no Tier 1 data and very little news saw a steady decline on the day after the Asian session pushed from the 1.0880 levels to test above the 1.0900, even into the London session early buyers again attempted to take the market higher however, they also failed and the drift to the NYK session was slow at best and the US numbers came out generally in line with expectations and the USD moved slightly ahead and the Euro was forced quickly to the 1.0860 levels and then steadily over the next few hours to trade around the 1.0850 areas, the move to the close saw a few sellers moving into the market whether because the last two weeks have seen the market gap lower or they were not willing to take the risk, the market closed just off the lows from the end of May.
• GBP: With light volumes the Cable saw some reasonable movement, the Asian market driving Cable from a quiet 1.5610 level to test into the London session pushing the 1.5670 areas before the drag of the Euro pulled and the market began to drift back to the opening levels, the move into NYK initially saw some light buying before the data release saw the market drop back and trigger stops through the 1.5600 level and fall to the 1.5570 areas, it eventually tested a little lower towards the 1.5550 areas before quickly bouncing as strong EURGBP selling moved in take the cross from the 0.6975 levels to the 0.6930’s in a quick move to post lows not seen since Pre-2008. Cable from the recovered 1.5640 areas then spent the session drifting to a close only just short of the opening levels.
• JPY: A very tight session for the USDJPY with bank holidays in Japan from Monday leaving the market a little thin and less inclined to move, opening around the 124.15 levels the market made initial headway to test through the 124.20 levels and into reasonable offers sufficient to turn the market and with a lack of data USDJPY then spent the whole of the Asian session drifting slowly back to the 124.00 levels, the move into London saw a downside push as the day traders moved in however it was as short lived as the attempt higher with the market moving off the 123.90’s and back to the opening levels over several hours, the market continued in this manner into the NYK opening and the release of the US data was unable to trigger a break out with the market testing only to the opening levels before again drifting off and the market eventually closing around the 124.10 areas.
• AUD: At least USDJPY saw some two way movement the Oz only just held its own in the Asian session opening around the 0.7410 areas and pushing to the mid-teens through the session and then drifting from the grey hours onwards with very little interest in the pair, London managed to push it below the 0.7390 levels however, the release of the US data sent the market down to test the 0.7370 area and that remained the low for the day with volumes massively off for the pair and close not too far from those lows.

Friday’s premiership results

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

AUD       Conference Board Leading Index May A 0.20% | P -0.30%

USD       Housing Starts Jun A 1.174M | C 1.09M | P 1.04M | R 1.069M

USD       Building Permits Jun A 1.343M | C 1.11M | P 1.25M | R 1.250M

USD       CPI M/M Jun A 0.30% | C 0.30% | P 0.40%

USD       CPI Y/Y Jun A 0.10% | C 0.10% | P 0.00%

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

USD       CPI Core Y/Y Jun A 1.80% | C 1.80% | P 1.70%

CAD       CPI M/M Jun A 0.20% | C 0.30% | P 0.60%

CAD       CPI Y/Y Jun A 1.00% | C 1.00% | P 0.90%

CAD       BoC CPI Core M/M Jun A 0.00% | C -0.10% | P 0.40%

CAD       BoC CPI Core Y/Y Jun A 2.30% | C 2.20% | P 2.20%

USD       U. of Michigan Confidence Jul (P) A 93.3 | C 96.5 | P 96.1

Stay lucky

Andy

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