Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 123.557 | EURUSD 1.10604 | AUDUSD 0.73351 | NZDUSD 0.66853 | USDCAD 1.29236 | USDCHF 0.96259 | GBPUSD 1.56115 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.635 | 123.33

EUR/USD             1.10845 | 1.1055

EUR/JPY               136.85 | 136.51

AUD/USD            0.7351 | 0.7317

NZD/USD             0.6739 | 0.6645

USD/CAD             1.2943 | 1.2920

EUR/CHF              1.0651 | 1.0642

USD/CHF             0.9623 | 0.96035

GBP/USD             1.5618 | 1.5604

EUR/GBP             0.70985 | 0.70865

For Today

• EUR: Early EURJPY buying helped the Euro higher from the opening in Tokyo having moved quietly around the 1.1060 levels, pushing gradually to the 1.1080 areas before running into offers and holding around the highs, with little data to help. Topside offers continue through the 1.1100 levels with possible day trading offers joining the topside offers remaining from earlier in the week, a break through the 1.1130 areas is likely to see weak stops before running into congestion around the 1.1150 areas and stronger levels into the 1.1200 areas, for the most part the market is likely to be quiet until the release of the FOMC however, expectations for a move on rates remain slim but a possibility none the less. Downside bids into the 1.1000 areas are likely to be weak with light stops through the 1.0980 areas with limited bids from then on into 1.0950. Through the 1.0950 levels the market is likely to open a little however; again this is all dependent on the FOMC commentary.
• GBP: Cable traded in a very tight range moving around the opening 1.5610 levels not quiet making the move to the 1.5620 and only just trading through the downside levels. Topside offers appear to be from the 1.5630 areas and running to the 1.5650 areas a strong push through the 1.5670 area is likely to trigger weak stops and the market could see a quick rise through to the 1.5700-20 areas and the market opening for a test beyond 1.5750 before offers are likely to slow the market. Downside bids into the 1.5550 areas are likely to see weak stops through the area and a push into a weaker 1.5500 level and the market opening to a larger move again to test through the 1.5400 areas, that would be given sufficient moment, and not likely unless there is some surprise in the FOMC
• JPY: With the FOMC later today the market has seen some fine tuning of positions over the session with USDJPY selling from the 123.60 opening areas down to 123.35 in light trading, some light EURJPY buying initially offset the move however eventually the USDJPY shifted lower and once it made the lows the market started a steady crawl back towards the 123.50 areas. Topside offers again remain in play from 123.80 onwards with a break through the 124.30 area likely to see mixed interest with weak stops likely to be dominated by the offers and the market on the break would need to grind through those offers and into the 124.50 levels and likely stronger offers from then on until the 125.00 areas. Downside bids into the 123.00 levels and likely to continue through the level however, a break through the 122.80 level will likely open up a deeper move with only limited congestion around the 122.50 areas and into the 122.00 level.
• AUD: The Oz saw strong buying into the new session with announcements of increase in interest rates at the largest mortgage lending bank AMP as the market attempts to control the property bubble while real term interest rates fall back, given this the chances according to the market of further RBA cuts are declining as the lenders increase their buffer against non-performing debt. The Oz pushed to the 0.7350 levels and into light offers and held for a good proportion of the session in the 0.7340-50 areas before an indifferent USD started to rise again to take the market through to the 0.7320 levels and not far from the level the rally started. Topside offers into the 0.7360 areas will likely give way to weak stops and then further offers into the 0.7400 areas and then a struggle with almost a months’ worth of congestion over the next big figure defining the limited ability of the market to move against the wishes of the RBA however, today is about the FOMC rather than anything else. Downside bids through the 0.7300 levels and possibly running as deep as 0.7240 before the market opens a little however, while the 72 cent level is likely to have option interest I would not be surprised if its lighter than normal and the 0.7180 areas remain probably the key levels for defining the next move.

Overnight News

NZD:

Wheeler Says N.Z. Economy Not Weak Enough for Big Rate Cuts

JPY:

Japan Panel Recommends Raising Minimum Wage by 18 Yen/Hour: NHK

Japan’s Suga: ‘Drastic’ wage rises needed for economic growth

Japan June Retail Sales Fall 0.8% M/m; Est. -0.9%

IMF’s Ganelli: Now Signs That Japan Inflation Trend Is Positive

USD:

U.S. Trade Representative Says Made ‘Good Progress’ on TPP Talks

TPP Nations Mull Forum to Stop Currency Manipulation: Reuters

GBP/EUR:

Osborne: Euro Zone Success is in the U.K.’s Interest

GBP:

U.K. Companies Spooked by Euro Crisis Diversify Trade, Poll Says

Today’s data

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

JPY         Retail Trade Y/Y Jun A 0.90% | C 1.00% | P 3.00%

06:00     CHF        UBS Consumption Indicator Jun P 1.73

06:00     EUR        German GfK Consumer Sentiment Aug C 10.1 | P 10.1

08:30     GBP       Mortgage Approvals Jun C 66.0K | P 64.4K

08:30     GBP       M4 Money Supply M/M Jun C 0.40% | P 0.50%

10:00     GBP       CBI Reported Sales Jul C 29 | P 29

14:00     USD       Pending Home Sales M/M Jun C 1.00% | P 0.90%

14:30     USD       Crude Oil Inventories P 2.5M

18:00    USD       FOMC Rate Decision C 0.25% | P 0.25%

Harry Hindsight              

• EUR: A gradual drift through the early part of the day moving from the opening 1.1090 areas the market did briefly attempt the 1.1100 level in early Tokyo having failed the level the market drifted steadily lower with cross selling in the EURAUD sending the market lower before creating general selling in the market to take the market down to the 1.1070 levels into the grey hours, although the market initially held up after the release of the GBP GDP trading around the 1.1060 levels before dropping as the pressure from the EURGBP selling broke through for a quick drop to the 1.1030 levels then drifting into the 1.1020 areas before a steady recovery through the remainder of the day trading back to the 1.1060 levels to the close.
• GBP: Cable ran through the Asian session tracking slightly higher moving from the opening 1.5560 level and pushing to the 1.5580 areas into the grey hours, concerns into the London session saw the market drop quickly back to the opening levels and then moving through the 1.5560 level triggering weak stops and dropping to the 1.5530 areas, the release of a GDP number in line with expectations and 0.30% higher than previous was enough to trigger a quick rise and a push to the 1.5600 levels before running into offers and slowing, the market then traded in a 20 pips range around the 1.5590 levels before again trying the topside and peaking just short of the 1.5630 level before trading in a narrow range around the 1.5610 levels. EURGBP dropped quickly from the release of the GDP levels and the market dropped from 0.7125 area and ran into the 0.7075 areas before holding and trading quietly to a close around the 0.7085 areas.
• JPY: USDJPY drifted off from the opening 123.25-30 levels holding the 123.10 areas into the Tokyo session EURAUD profit taking was enough to correct the direction of the AUD and this caused a small short squeeze in the AUDJPY and USDJPY quickly moved off its lows as fresh carry trade buying moved USDJPY back to the 123.50 levels before continuing in a more sedate manner pushing through into the London session to trade to the 123.80 levels before drifting a little into the NYK session to trade quietly around the 123.60 levels to the close.
• AUD: The Oz made a steady recovery through the session with the early selling to the 0.7260 seeing strong profit taking in EURAUD which then saw AUDJPY buying kick in to take the carry trade quickly higher leading to both legs USDJPY and AUDUSD moving higher, the Oz moved off the 0.7260 areas and quickly moved through the 0.7310 levels before dipping a little and continuing into the grey hours to push above the 0.7320 levels, the market held the 73 cent levels through into the NYK session before the market again edged higher towards  the close of the session pushing to the 0.7340 levels.

Yesterday’s premiership results

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

GBP       GDP Q/Q Q2 (A) A 0.70% | C 0.70% | P 0.40%

GBP       Index of Services 3M/3M May A 0.40% | C 0.50% | P 0.50%

CAD       Industrial Product Price M/M Jun A 0.50% | C 0.20% | P 0.50%

CAD       Raw Materials Price Index M/M Jun A 0.00% | C 1.10% | P 4.40%

USD       S&P/Case-Shiller Composite-20 Y/Y May A 4.90% | C 5.30% | P 4.91% | R 5.00%

USD       Consumer Confidence Jul A 90.9 | C 100 | P 101.4 | R 99.8

Good Luck,

Andy

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