Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 123.966 | EURUSD 1.09288 | AUDUSD 0.7376 | NZDUSD 0.65852 | USDCAD 1.3032 | USDCHF 0.95987 | GBPUSD 1.56117 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               124.15 | 123.915

EUR/USD             1.0956 | 1.0922

EUR/JPY               135.85 | 135.44

AUD/USD            0.7399 | 0.7357

NZD/USD             0.6654 | 0.6565

USD/CAD             1.3047 | 1.3025

EUR/CHF              1.0501 | 1.0488

USD/CHF             0.9602 | 0.9583

GBP/USD             1.5626 | 1.5600

EUR/GBP             0.7014 | 0.6996
For Today

• EUR: After a quiet opening around the 1.0930 levels the market started to edge higher after the Greek announcement of another vote completed, Euro’s moved from the lows in the mid 1.0920’s to push above the 1.0950 as buying in mostly Euro crosses helped the move, having pushed above the 1.0950 the market was unable to push ahead and after a couple of hours started to drift lower. Topside offers into the 1.0970 levels increasing into the 1.1000 areas with light congestion into the 1.1030 areas and those offers likely to continue lightly to the 1.1050 areas before the market opens a little and exposes the 1.1100 levels for a test. Downside bids light into the 1.0900 levels with possible weak stops through the 1.0870 levels however, a move to the 1.0850 levels will likely see a congregation of bids waiting as the market moves towards the lows of earlier in the week but a push through the 1.0800 areas will possibly see further weak stops and then bids into the 1.0750 areas and down to 1.0700 levels.
• GBP: Cable was left in a tight range, opening around the 1.5615 areas, dipping to the 1.5605 areas the market was dragged along by a rising Euro and taken to the 1.5625 areas before slowing and drifting. Topside light offers above the 1.5640 areas and through the 1.5650 area before opening up for a test towards the 1.5700 levels and stronger offers from there to 1.5750. Downside bids into the 1.5550 areas will likely see weak stops on a move through the level and an opening to test the 1.5500 areas with sentimental bids only in the area and opening the downside for a further test.
• JPY: Dead in the water, with a lack of liquidity the market remained around the 124.00 levels pushing in early Tokyo to above the 124.10 areas before slipping back to the opening levels around the 123.95 areas. Topside light offers into the 124.20-30 areas however, once through the possibility of weak stops are slight with the offers likely to quickly reappear on a move towards the 124.50 areas and those offers likely to increase as the market grinds towards the 125.00 areas and the increasing possibility of verbal intervention from BoJ/MoF individuals. Downside bids continual through the 124.00 levels and into the 123.70 area while the bids are likely to be light through that level better bids are possibly into the 123.50 levels with weak stops through 123.40 level for a change bids are then likely to be weak until a move through 123.00 and an opening for a deeper move unless yield buyers move in and they are thinner on the ground than previous.
• AUD: Moving down from the opening level drifting to the 0.7360 levels before NAB confidence numbers reversed the move however, the range was limited with volumes poor. Light offers into the 0.7420 areas and likely to increase as the market moves through the 0.7440 areas possible weak stops through the 0.7450 areas before stronger offers start to appear and the 75 cent level looking fairly strong. Downside bids through the 0.7340 areas and likely to be light however, those bids are likely to increase as the market moves towards the 73 cent level with potential option interest, a break through the area will likely see break out stops appearing in the market and an opening for a deeper move towards the 0.7180.

Overnight News

NZD:

RBNZ cuts key interest rate 25bp as expected to 3.00%

RBNZ says some further easing seems likely

RBNZ Omits reference to NZD level being unjustified

RBNZ Further NZ$ depreciation necessary given commodity prices

EUR:

Greek parliament passes second crucial bailout bill

Euro firms after Greek Parliament passes bailout reforms

AUD:

Business confidence, activity improves in Q2

JPY:

Japan’s June exports rise 9.5% YoY

Today’s data

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

NZD       RBNZ Rate Decision A 3.00% | C 3.00% | P 3.25%

JPY         Trade Balance (JPY) May A -0.25T | C -0.25T | P -0.18T | R -0.16T

AUD       NAB Business Confidence 2Q A 4 | P 0

08:30     GBP       Retail Sales M/M Jun C 0.40% | P 0.20%

12:30     CAD       Retail Sales M/M May C 0.40% | P -0.10%

12:30     CAD       Retail Sales Ex Auto M/M May C 0.70% | P -0.60%

12:30     USD       Initial Jobless Claims Jul 17 C 275K | P 281K

14:00     EUR        Consumer Confidence Jul (A) C -5.8 | P -5.6

14:00    USD       Leading Index M/M Jun C 0.10% | P 0.70%

Harry Hindsight              

• EUR: As summer volumes well and truly kick in the market traded the 1.0930-60 levels through the Asian session with RBA’s Steven’s moving the market more than anything else with the market dropping from the highs back through the opening range and through the 1.0930 levels before finding sufficient support to turn the market, the move into London saw a brief flurry to the topside and the market made the highs of the day on a move into the mid 1.0960’s and then a steady drift through the session into NYK with the lows tested again and a push to the 1.0920. Early NYK followed through from the opening with concerns about the 2^nd vote in Greece and steady selling took the market to the 1.0870 area without doing too much damage and stops limited through the fall, the end of the London session saw the downside pressure disappear and the market started a steady rise over the rest of the session to push towards the 1.0930 area and just short of the opening 1.0940 levels.
• GBP: Cable moved quietly through the Asian session pushing from the 1.5555 level and pushing into the high 1.5570’s before falling back to the opening levels as RBA’s Steven started to talk. Early London were quick buyers and the market ran to the 1.5610 levels with the market expecting no change, the market continued to rise over the London session spiking a little higher after the news that the early buyers had guessed right if it wasn’t too obvious given the odd mention in the run up to today, the market pushed towards the 1.5650 levels however, although the market maintained the pressure after the numbers and news that the BoE is getting closer to raising interest rates and one suspects that if inflation does start to increase it will be a quick step. Once the London session finished the buying pressure eased back and the GBP drifted quickly back to the 1.5580 levels and then a steady rise to the close to finish just above the 1.5610 areas.
• JPY: USDJPY opened around the 123.85 areas and then moved quietly lower until the move in Oz lower taking the USDJPY quickly to the 123.65 areas, Asia continued pushing to the downside however, it was unable to push through the 123.60 levels to far and the move into the London session saw limited buying moving into the market to gradually push back above the 123.80 levels. NYK were quick buyers of the USDJPY and was soon back above the 124.10 areas however, that was all and the market was unable to push too far and drifted back to sub 124.00 into the close.
• AUD: The Oz held the opening levels around the 0.7425 areas before spiking higher on the CPI numbers and a push to the 0.7440 areas before RBA’s Steven’s started to speak and the market quickly changed direction triggering weak stops from recent longs and taking the market eventually through to the 0.7370 areas before bouncing back to trade around the 0.7410 levels into the London session. The move into the NYK session saw the Oz again under pressure and pushing through the days lows in a steady move to push to the 0.7360 levels before London closed and the market moved to the 0.7380 closing areas.

Yesterday’s premiership results

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

AUD       Westpac Leading Index M/M Jun A 0.00% | P -0.10%

AUD       CPI Q/Q Q2 A 0.70% | C 0.80% | P 0.20%

AUD       CPI Y/Y Q2 A 1.50% | C 1.70% | P 1.30%

AUD       CPI Trimmed Mean Q/Q Q2 A 0.60% | C 0.60% | P 0.60% | R 0.70%

AUD       CPI Trimmed Mean Y/Y Q2 A 2.20% | C 2.10% | P 2.30%

AUD       CPI Weighted Median Q/Q Q2 A 0.50% | C 0.60% | P 0.60% | R 0.80%

AUD       CPI Weighted Median Y/Y Q2 A 2.40% | C 2.30% | P 2.40% | R 2.50%

JPY         All Industry Activity Index M/M May A -0.50% | C -0.60% | P 0.10%

GBP       MPC Official Bank Rate Votes A 0—0—9 | C 0–0—9 | P 0–0–9

GBP       MPC Asset Purchase Facility Votes A 0—0—9 | C 0–0—9 | P 0–0–9

USD       House Price Index M/M May A 0.40% | C 0.40% | P 0.30% | R 0.40%

USD       Existing Home Sales Jun A 5.49M | C 5.40M | P 5.35M | R 5.32M

USD       Crude Oil Inventories A 2.5M | C -1.7M | P -4.3M

Good Luck,

Andy

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