Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 124.144| EURUSD 1.09309 | AUDUSD 0.72924 | NZDUSD 0.6598 | USDCAD 1.30025 | USDCHF 0.96931 | GBPUSD 1.56005 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               124.29 | 123.91

EUR/USD             1.0949 | 1.0928

EUR/JPY               135.89 | 135.62

AUD/USD            0.7310 | 0.7284

NZD/USD             0.6617 | 0.6569

USD/CAD             1.3010 | 1.2991

EUR/CHF              1.05935 | 1.0580

USD/CHF             0.9692 | 0.96635

GBP/USD             1.5615 | 1.5579

EUR/GBP             0.7016 | 0.70065

For Today

• EUR: Another quiet session moving slowly higher from the opening and testing into the mid 1.0940’s before drifting through the session around the 1.0940 levels. Topside offers likely into the 1.0980 areas with the market opening a little on a move through not likely to see much resistance until above the 1.1000 levels with a push through the 1.1020 level opening the market for a quick move towards the 1.1060 levels and better offers into the 1.1080-1.1100 levels. Downside bids light through the 1.0920 levels, a move to the 1.0900 areas will again see support appearing and only a push through 1.0870 will open the downside and then the market is open to the 1.0820 areas and the lows of the month with possibly better liquidity on the bid side. German retail sales and Unemployment rates for the Eurozone of import today, with US numbers of more import to the USD later in the session.
• GBP: As with yesterday’s trading through Asia the market remained around the 1.5600 levels through the session dipping into the 1.5590’s before pushing towards the 1.5610 levels and holding in the area as the market moved towards the London session, topside offers into the 1.5650 areas with a push through the level likely to see a test to the stronger 1.5690-1.5700 areas which for the most part has held since it dropped down at the beginning of July, and even through the area the market would still see offers quickly moving in with congestion to the 1.5750 areas. Downside bids down through 1.5600 areas and into the 1.5590 with the likelihood of weak stops mixed in with the bids and better bids to the 1.5550 areas, a move through this level opens up the 1.5500 areas which is likely not to be too strong and opens up a larger downside move.
• JPY: The move towards the weekend saw the USDJPY gradually drifting having traded to the mid 124.20’s before fixing supply sent the market back to the 124.00 levels, a better national CPI reading seemed to be the stronger number released against a set of weaker numbers around it. The market struggled to maintain its levels and slowly drifted to the 123.90 areas and negated the previous 24hrs of trading. Topside offers are likely to be unchanged with the 124.50 areas again likely to be strong a possibility of weak stops through the 124.60 areas however, the offers are likely to quickly suppress those stops and the offers are likely stronger as you approach 124.80-125.00. Downside has bids into the current levels with the market likely to see weak bids all the way down to the 123.50 areas before those bids disappear however, the bids quickly reappear as the market approaches the 123.20 areas and into the 123.00 levels and the possibility of further congestion on a run lower, through the 122.50 areas the market is likely to test 122.00 quickly and an opening for a larger move lower.
• AUD: The Oz remains on the weak side however, how far can the Oz continue to weaken too, or has it reached the point of comfort? Downside bids are strong on moves through the 0.7270 levels and into the 0.7240 areas, once cleared the possibility of option plays remains into the 0.7200 levels and possibly very little once the market clears the 0.7180 areas apart from possible longer term profit taking. Topside offers through to the 0.7320 areas with those offers likely to increase on a move towards the 0.7360 levels and for the moment 74 cents looks a long way away, poor US numbers could have impact however, I think only better economic news in Australia will benefit the Oz at this point.

Overnight News

JPY:

Japan FinMin: TPP is not a place to negotiate currencies

Japan June Core Consumer Prices Rise 0.1% Y/y; Est. 0%

Japan June Unemployment Rate at 3.4%; Est. 3.3%

CNY:

China Asks Insurers to Avoid Net Sales of Equities: Sec. News

China Allows Foreign Traders Use FX, Yuan Buy Some Local Futures

GBP: Lawmakers to Question BOE Vlieghe on Conflict of Interest: FT

U.K. July GfK Consumer Confidence +4 vs Est. +5

EUR:

Greece’s Syriza Party Committee Calls Sept. Congress: Statement

CHF:

SNB Posts First-Half Loss of CHF50.1b on FX, Gold Holdings

AUD:

Australia’s Robb Says TPP Dairy Talks Going ‘Very Slowly’

Australian June Credit to Business, Consumers Rises 0.4% M/M

Australian 2Q Producer Prices Rise 0.3% Q/Q

NZD:

N.Z. June Household Lending Gains Most Since March Last Year

New Zealand Business Confidence Slumps to Six-Year Low, ANZ Says

Today’s data

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

GBP       GfK Consumer Sentiment Jul A 4 | C 5 | P 7

JPY         Jobless Rate Jun A 3.40% | C 3.30% | P 3.30%

JPY         Household Spending Y/Y Jun A -2.00% | C 1.90% | P 4.80%

JPY         National CPI Core Y/Y Jun A 0.10% | C 0.00% | P 0.10%

JPY         Tokyo CPI Core Y/Y Jul A -0.10% | C 0.00% | P 0.10%

NZD       NBNZ Business Confidence Jul A -15.3 | P -2.3

AUD       PPI Q/Q Q2 A 0.30% | P 0.50%

AUD       PPI Y/Y Q2 A 1.10% | P 0.70%

JPY         Housing Starts Y/Y Jun A 16.30% | C 3.00% | P 5.80%

6:00        EUR        German Retail Sales M/M Jun C 0.30% | P 0.50%

9:00        EUR        Eurozone Unemployment Rate Jun C 11.00% | P 11.10%

9:00        EUR        Eurozone CPI Estimate Y/Y Jul C 0.20% | P 0.20%

9:00        EUR        Eurozone CPI – Core Y/Y Jul (A) C 0.80% | P 0.80%

12:30     USD       Employment Cost Index Q2 C 0.60% | P 0.70%

12:30     CAD       GDP M/M May C 0.00% | P -0.10%

13:45     USD       Chicago PMI Jul C 50.5 | P 49.4

14:00    USD       U. of Michigan Confidence Jul (F) C 94 | P 93.3

Harry Hindsight              

• EUR: A gradual move lower over the course of the day with cross selling leading the way in Asia to take the market from the opening 1.0985 areas down to trade against the 1.0960 areas before slowly recovering to the 1.0980 levels into the London session, Early London were quick sellers in front of the numbers to recover after the release of the German numbers in particular. The move through the London session saw the market drifting lower with confidence numbers better than expected however, talks over the new rescue plan for Greece saw IMF officials derailing the talks with calls for explicit assurances over debt relief from the Eurozone. The market eventually tested through the 1.0900 levels after struggling to push through the 1.0920 areas before slowly rising once the London session was over and NYK took the market back to the 1.0930 areas in weak trading with weaker GDP figures not really impacting until late in the session.
• GBP: Overall the day ended unchanged for the most part with Cable holding around the 1.5600 levels, Asia trade down to the 1.5590 levels and found sufficient interest there to hold through the session and the move into the London session saw a gradual rise once all the Euro data was released and the market moved to just above the 1.5640 levels before moving into the NYK session and a steady drift lower, a push through the 1.5590 saw weak stops cleared and the market hit the 1.5560’s before running out of London and the market slowly started to rise over the rest of NYK to finish the day little changed. The general movement of Cable was connected obviously to the general movement of the Euro and although Cable ended unchanged the EURGBP was not so lucky and the cross drifted steadily lower pushing into the NYK session moving from the 0.7030 areas to test through the 0.7000 areas and dipping into the 0.6980 areas eventually before a slow rise to the 0.7010 areas.
• JPY: Weakness in Euro or strength of the USD, the USDJPY moved from the 123.90 areas and moved to the 124.20 areas into the Tokyo session with fixing demand driving the market higher initially before holding the 124.10-20 areas into the London session, movement in the Euro lower saw the USD moving higher and the market slowly but surely moved to the 124.40 areas the first push through the level saw the market spike to the 124.50 areas in a tentative attempt higher and quickly dropped back as the offers appeared as call levels were hit, the second attempt was again a jab to the topside again it failed this time getting close to the 124.60 areas and this failure opened up a steady sell off with weak stops through 124.20 and the market holding the 124.10-20 range again.
• AUD: As the USDJPY rose the Oz slowly moved lower as a limited USD move contained the market, moving off the 0.7295 areas the Oz initially moved to the 0.7320 areas and struggled for several hours at the level, early London entered the market as quick sellers and pushed the market back to the starting levels, the selling continued as the USDJPY pushed through the 124.20 areas and the Oz dropped to the 0.7270 areas with a brief stab to the 0.7260 levels before the bids held, the move into the NYK session did nothing for the most part and the downside held and once London left the market again moved to the opening levels and held to the close.

Yesterday’s premiership results

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

NZD       Building Permits M/M Jun A -4.10% | P 0.00%

JPY         Industrial Production M/M Jun (P) A 0.80% | C 0.30% | P -2.10%

AUD       Import Price Index Q/Q Q2 A 1.40% | C 1.50% | P -0.20%

AUD       Building Approvals M/M Jun A -8.20% | C -1.00% | P 2.40% | R 2.30%

CHF        KOF Leading Indicator Jul A 99.8 | C 90.3 | P 89.7 | R 89.8

EUR        German Unemployment Change Jul A 9K | C -5K | P -1K | R 1K

EUR        German Unemployment Rate Jul A 6.40% | P 6.40%

EUR        Eurozone Economic Confidence Jul A 104 | C 103.2 | P 103.5

EUR        Eurozone Business Climate Indicator Jul A 0.39 | C 0.19 | P 0.14

EUR        Eurozone Industrial Confidence Jul A -2.9 | C -3.4 | P -3.4

EUR        Eurozone Services Confidence Jul A 8.9 | C 8 | P 7.9

EUR        Eurozone Consumer Confidence Jul (F) A -7.1 | C -7.1 | P -7.1

EUR        German CPI M/M Jul (P) A 0.20% | C 0.20% | P -0.10%

EUR        German CPI Y/Y Jul (P) A 0.20% | C 0.30% | P 0.30%

USD       GDP (Annualized) Q2 (A) A 2.30% | C 2.60% | P -0.20% | R 0.60%

USD       GDP Price Index Q2 (A) A 2.00% | C 1.50% | P 0.00% | R 0.10%

USD       Initial Jobless Claims (JUL 25) A 267k | C 271K | P 255K

Good Luck,

Andy

P.S. It’s that time of year were I waste my time in the hope of getting the big ones I can see swimming around in the water, you know the ones, the ones that are laughing at me. Back on the 17^th August.

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