Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 123.892 | EURUSD 1.09842 | AUDUSD 0.73556 | NZDUSD 0.66161 | USDCAD 1.30363 | USDCHF 0.95995 | GBPUSD 1.5515 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               124.05 | 123.845

EUR/USD             1.09935 | 1.0965

EUR/JPY               136.305 | 135.88

AUD/USD            0.7362 | 0.7269

NZD/USD             0.6624 | 0.6564

USD/CAD             1.3050 | 1.3018

EUR/CHF              1.0549 | 1.0536

USD/CHF             0.96125 | 0.95865

GBP/USD             1.5523 | 1.5501

EUR/GBP             0.7082 | 0.7069
For Today

• EUR: The Euro moved quietly into the Asian session only briefly testing above the 1.0990 levels before steady EURJPY selling moved in as the week draws to a close in Asia and the market there looking unwilling to hold positions, Euro’s moved down to the 1.0970 areas and looks to be heading into London around those levels. Downside light bids into the 1.0960 level with the market likely to open to a test to the 1.0900 areas with light stops likely through the 1.0950 areas, downside bids are not likely to improve until a move through the 1.0870 levels and stronger stops are likely for a move back towards the 1.0820-00 areas. Topside offers continue through the 1.1000 areas and into the 1.1020 areas with the possibility of weak stops through the 1.1030 areas however, further congestion is likely into the 1.1050 levels but the market will eventually open for a test to the 1.1100 areas and only weak offers into the level and an opening to the topside and recent highs around the 1.1200 level. PMI numbers around Europe the only concern for the day with mixed expectations.
• GBP: Very quiet trading through the session with early flirtations with the 1.5520 levels before the market drifted towards the 1.5500. Downside bids likely to run to the 1.5480 levels before clearing congestion and the market opening for a possible quick test to the 1.5400 areas with the possibility of mixed interest and a possible deeper move. Topside offers light into the 1.5600 levels with the market likely to see those offers extending further with the market having been stuck in a 1.5560-1.5680 area for much of the weak, obviously the retail sales numbers have a bearing on the weakness yesterday however, a push back to the 1.5640-60 areas could see weak stops opening up a test to the 1.5700 levels and into the next offers.
• JPY: USDJPY stuck in a tight range through the session, with the market moving steadily in early trading to the 124.05 level before the market started to see EURJPY selling moving in to set the market lower and the USDJPY pushed into the 123.80’s and held in the area in quiet trading overall. Topside offers above the 124.20 with the possibility of weak stops on a push through the 124.30 levels however, the chances of the offers continuing is strongly possible and BoJ/MoF comments likely to be still fresh in people’s minds and stronger offers still likely into the 125.00 areas. Downside bids likely to be limited but sufficient to hold the 123.60 however, a push through the level is likely to open up the 123.20 areas for a test and stronger bids, given the data available today the EURJPY is possibly the one to watch.
• AUD: Quiet trading in the early part of the session saw the market testing the 0.7350 levels the release of poor CNY PMI manufacturing numbers sent the Oz in a tail spin dropping quickly to the 0.7310 levels and all though the market was supported around the area the market eventually pushed firmly through the session and quickly tested the 0.7270 areas triggering weak stops before a limited bounce to the 0.7300 areas and looks to be moving into London around that level. Downside bids possible into the 0.7250 areas with a push through the level opening up a larger move down into the 71cent handle and possibly further. Topside offers light until close to the 74 cent levels now and given today’s move a possible small squeeze through 0.7340-50 areas opening that level up.

Overnight News

JPY:

Meiji Yasuda to buy StanCorp for around 600B Yen Nikkei

Japan debt risks rise to triple GDP without change, IMF says

CNY:

July Flash manufacturing PMI 48.2 against estimate 49.7

China July factory activity falls to 15 month low

AUD:

S&P could lower Australia’s ratings if budget doesn’t improve however, statement remains stable.

NZD:

Jun Residential mortgage lending falls 6.6% MoM

USD:

US has put sanctions on a North Korean linked shipping company

Today’s data

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

NZD       Trade Balance May A -60M | C 100M | P 350M | R 371M

JPY         PMI Manufacturing Jul A 51.4 | C 50.5 | P 50.1

CNY        Caixin PMI Manufacturing Jul A 48.2 | C 49.8 | P 49.4

07:30     EUR        Germany Manufacturing PMI Jul C 51.9 | P 51.9

07:30     EUR        Germany Services PMI Jul C 54 | P 53.8

08:00     EUR        Eurozone Manufacturing PMI Jul C 52.5 | P 52.5

08:00     EUR        Eurozone Services PMI Jul C 54.2 | P 54.4

14:00    USD       New Home Sales Jun C 540K | P 546K

Harry Hindsight              

• EUR: Quietly rising through the early part of Asia pushing to the 1.0950 areas before the market started to drift from mid-session into the grey hours to the opening 1.0925 areas. Early buying into the London open saw the market quickly move through the highs to test the 1.0990 levels with plenty of two action occurring in the areas with minor breaches of the 1.1000 levels through into the NYK session pushing towards the 1.1020 level before dropping quickly back to the 1.0950 areas on the release of the Jobless claims numbers, late Euro Consumer confidence numbers helped to turn the market back towards those highs however, the topside was again resistant to the move and the market closed just off the 1.1000 areas.
• GBP: Asia was quiet all the way through with the market rising to the 1.5620 areas from an opening only just below the level, the move into the grey hours saw the Cable move higher with the Euro and testing through to the 1.5670 areas, EURGBP moved steadily to the 0.7050 areas from the Asian lows 0.6990 levels holding the 0.7050 areas into the NYK session before running steadily to touch through the 0.7100 areas, Cable was quickly lower from the release of the retail sales numbers which came in lower dropping back to the 1.5600 levels, the release of the US jobless claims numbers sent the Cable crashing through the level with weak stops triggered and the market falling to the 1.5540 levels. The market continued drifting through the session with the Cable drifting to the 1.5500 levels and then holding the level into the close.
• JPY: A choppy day overall but limited in range, with early Tokyo taking the market above the 124.10 levels before finding sufficient offers to hold the market after poor trade balance numbers, the market then drifted lower and tested through the 124.00 areas before running for a second time at the topside only just gaining the 124.10 areas this time, the move into the London session saw strong GBPJPY selling moving in and the USDJPY dropped to its lowest level and into the supportive bids around the 123.70-80 levels briefly dipping through 123.70 to set the low for the day. A quiet period saw the market rising quickly higher on the release of the US initial claims testing towards the 124.20 areas and the range for the day was set before dropping back towards the lows in a lacklustre finish for the day and finishing the day only just short of the opening.
• AUD: The Oz was quiet for the most part with the early market testing the 0.7360 on the downside and 0.7390 to the topside, the move into London saw quick buying to the 0.7410 areas the highs made more on general light day trading than anything else, the market maintained the 0.7410 until the move into the NYK session and the ascendency of the USD after the initial claims numbers falling back to its original range around the 0.7370 and drifting to the 0.7350 levels into the close.

Yesterday’s premiership results

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

GBP       Retail Sales M/M Jun A -0.20% | C 0.40% | P 0.20% | R 0.30%

CAD       Retail Sales M/M May A 1.00% | C 0.40% | P -0.10%

CAD       Retail Sales Ex Auto M/M May A 0.90% | C 0.70% | P -0.60% | R -0.50%

USD       Initial Jobless Claims Jul 17 A 255K | C 275K | P 281K

EUR        Consumer Confidence Jul A 7 | C -5.8 | P -5.6

USD       Leading Index M/M Jun A 0.60% | C 0.10% | P 0.70% | R 0.80%

Good Luck,

Andy

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