Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 124.406 | EURUSD 1.1026 | AUDUSD 0.73407 | NZDUSD 0.65875 | USDCAD 1.30567 | USDCHF 0.97744 | GBPUSD 1.56605 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               124.43 | 124.22

EUR/USD             1.1053 | 1.1022

EUR/JPY               137.39 | 137.13

AUD/USD            0.7345 | 0.7314

NZD/USD             0.6600 | 0.6575

USD/CAD             1.3062 | 1.3042

EUR/CHF              1.0795 | 1.0770

USD/CHF             0.9777 | 0.9766

GBP/USD             1.5678 | 1.5657

EUR/GBP             0.7052 | 0.7040

For Today

• EUR: Euro’s regained some of its losses through the Asian session with another lacklustre day of trading, moving from the opeing just below 1.1030 the market gradually moved higher once the Tokyo session opened pushing to above the 1.1050 levels before running out of steam and holding quietly in the 1.1040-50 areas. Topside o0ffers likely to be a little thin on the ground until the 1.1080 levels with the possibility of weak stops on a move through the 1.1100 areas before again seeing resistance into the 1.1120-30 areas and then a possible long hard path to the stronger resistance into the 1.1200 areas. Downside bids likely into the 1.1020 levels with the market finding plenty of congestion through the 1.1000 areas and into the 1.0950 areas, a break through these levels will probably see an opening for a test through the 1.0900 lightly protected areas and towards the 1.0800 areas. However, this is all dependent on the FOMC meeting.
• GBP: Cable edged higher however, as with yesterday the Asian session was not particularly exciting and the market moved off the opening around the 1.5660 level and could not push back through the 1.5680 level and traded for much over the session around the 1.5670 level. Topside offers remain into the 1.5700-20 areas with stops through the level a possibility before further congestion over the next 50 pips or so and then stronger offers dominate into 1.5800 areas. Downside bids light into 1.5600 and weak stops on a push through the 1.5640 and the market opening for a deeper move into the 1.5450-00 areas.
• JPY: With flows from the EM market needing new homes the USDJPY today weakened a little and the USDJPY having made the highs from the fix in Tokyo drifted through the session however, the move was gradual and was limited in reaction dipping back into the low 124.20’s before finding support and holding into the grey hours. Topside offers remain above the 124.50 level and continuing into the 125.00 areas, even through the figure the offers remain and for the moment the market looks unlikely to push through to the topside however, saying that the downside still remains as tough with Abenomics running it’s failed course and fresh ideas needed it would seem, with bids into the 124.20 levels possibly weaker than they were with safe haven flows buying JPY a distinct possibility any push through the 123.70 areas is likely to trigger weak stops and the market opening for a test to the 123.00 area and a similar play to the 124.00 area.
• AUD: No news is no news and the Oz traded quietly through the early part of the session holding the 0.7335-45 areas for the most part before dipping lower into the late session as selling moved in late in the session as SHCOMP dipped through support, the market managed a bounce from the lows of 0.7315 area and has held in the 0.7330 areas as we move into the grey hours. Bids into the 73 cent level still remain and a congestive area awaits below that level and into the 0.7260 areas however, a strong push through the 0.7220-0.7200 area will open the downside lows for further testing, topside has offers into the 74 cent level but a less intimidating however, the 0.7440-60 level seems to be a little more sturdy (notwithstanding FOMC) with more offers slightly above and then once the market clears the 75 cent area opening for a larger move higher.

Overnight News

JPY:

Japan’s Export Growth Slows in July, Pressuring Manufacturers

Japan June All Activity Index Rises 0.3% M/m; Est. +0.4%

CNY:

Yuan Rate Adjustment to Boost Market Confidence in Yuan: Shen

PBOC’s Yuan Reference Rate Little Changed at 6.3963/USD

China Jan.-July Outbound Investment Rises 20.8% Y/y in Yuan Term

China to Introduce Reform Measures on SOEs, Finance: Xinhua

China Appoints Yin Yong PBOC Assistant Governor

PBOC Injects Liquidity to Some China Banks via MLF Tool: Reuters

GBP:

BOE’s Miles: Turning Point on Rate Is Coming Pretty Soon

NZD:

N.Z. Producer Prices Drop for Fifth Consecutive Quarter

Fonterra Sees China Yuan Devaluation Boosting Dairy Demand: WSJ

Today’s data

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

NZD       PPI Inputs Q/Q Q2 A -0.30% | C -0.50% | P -1.10%

NZD       PPI Outputs Q/Q Q2 A -0.20% | C -0.20% | P -0.90%

JPY         Trade Balance (JPY) Jul A -0.37T | C -0.16T | P -0.25T | R -0.28T

AUD       Westpac Leading Index M/M Jul A 0.00% | P 0.00%

JPY         All Industry Activity Index M/M Jun A 0.30%| C 0.40% | P -0.50%

08:00     EUR        Eurozone Current Account (EUR) Jun C 19.2B | P 18.0B

12:30     USD       CPI M/M Jul C 0.10% | P 0.30%

12:30     USD       CPI Y/Y Jul C 0.20% | P 0.10%

12:30     USD       CPI Core M/M Jul C 0.20% | P 0.20%

12:30     USD       CPI Core Y/Y Jul C 1.90% | P 1.80%

14:30     USD       Crude Oil Inventories P -1.7M

18:00     USD       FOMC Meeting Minutes

Harry Hindsight              

• EUR: A very quiet Asian session saw the market trading around the 1.1080 levels until late in the session before dropping back to test into the 1.1050’s for the move into the grey hours; a lack of data during Asia was partly to blame for the silence. The move into the grey hours eventually saw the early London market picking up the bargains and running the Euro back to the opening levels, and as the UK inflationary numbers started to be released the Euro piggy backed the move higher and traded to above the 1.1090 levels losing ground against the GBP, the Euro eventually ran into resistance and dipped back to the previous levels until moving into the NYK session, no major problems with the housing numbers gave the USD room to move higher and the Euro dropped quickly back through the 1.1060 levels triggering some minor stops along the way to test the 1.1020 areas and then trade around the 1.1030 level to the close in quiet trading.
• GBP: Cable drifted through the Asian session pretty much like the rest of the market, trading around the 1.5580 levels before peaking above the 1.5590 and then late buying of USD’s saw the Cable dip through the 1.5570 levels before London started to buy it back before the numbers were released, headline CPI numbers showed a rise from the 0.00% and the market quickly gapped higher moving quickly to the 1.5670 levels with light profit taking kicking in before again renewing the move to test to the 1.5715 areas and holding above the 1.5700 levels into the NYK session. EURGBP cross having held around the 0.7110 levels through the Asian session and the release of the numbers saw the EURGBP dropped quickly back through the 0.7080 levels before continuing more steadily over the next few hours to reach 0.7030 areas before finding support and holding the 0.7040-50 levels to the close. The move into the NYK session saw the Cable drift back through the 1.5700 levels and dipped eventually back to the 1.5650 areas before trading quietly through to the close around the 1.5660 area.
• JPY: USDJPY opened around the 124.40 areas and slowly edged higher over the course of the Asian session, the move into the grey hours saw USDJPY selling kicking in and the market tested to the 124.20 levels with a little bit of help from the GBP move, the market held the downside and traded in a narrow range before bouncing back to the opening range into the NYK session and holding the 124.40 levels to the close.
• AUD: The Oz traded quietly into the RBA minutes with very little to report from them being in line with previous minutes and a general consensus that everything was as it should be for the Ozzies, the move towards the grey hours saw the market starting to trade lower with weakness in CNY limiting the early push to 0.7385, the move into the London session saw the market follow through with the action and dip to the 0.7335 areas before finding a little respite as GBPAUD buying in a roaring GBP market drag Oz a little higher, the market eventually dipped lower and held the 0.7320 areas before slowly making its way back to the 0.7345 into the close.

Yesterday’s premiership results

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

GBP       CPI M/M Jul A -0.20% | C -0.30% | P 0.00%

GBP       CPI Y/Y Jul A 0.10% | C 0.00% | P 0.00%

GBP       Core CPI Y/Y Jul A 1.20% | C 0.80% | P 0.80%

GBP       RPI M/M Jul A -0.10% | C -0.10% | P 0.20%

GBP       RPI Y/Y Jul A 1.00% | C 1.00% | P 1.00%

GBP       PPI Input M/M Jul A -0.90% | C -2.00% | P -1.30% | R -1.80%

GBP       PPI Input Y/Y Jul A -12.40% | C -12.80% | P -12.60% | R -13.10%

GBP       PPI Output M/M Jul A -0.10% | C -0.10% | P 0.00% | R -0.10%

GBP       PPI Output Y/Y Jul A -1.60% | C -1.50% | P -1.50% | R -1.60%

GBP       PPI Output Core M/M Jul A 0.10% | C 0.00% | P 0.00%

GBP       PPI Output Core Y/Y Jul A 0.30% | C 0.20% | P 0.10%

GBP       DCLG UK House Prices Y/Y Jun A 5.70% | C 5.90% | P 5.70%

USD       Building Permits M/M Jul A -16.30% | C -10.30% | P 7.40% | R 7.00%

USD       Housing Starts M/M Jul A 0.20% | C 0.50% | P 9.80% | R 12.30%

USD       Building Permits Jul A 1.12M | C 1.21M | P 1.34M

USD       Housing Starts Jul A 1.21M | C 1.20M | P 1.17M | R 1.20M

Good Luck,

Andy

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