Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 123.41 | EURUSD 1.12408 | AUDUSD 0.73379 | NZDUSD 0.66249 | USDCAD 1.3085 | USDCHF 0.85858 | GBPUSD 1.56891 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.50 | 122.81

EUR/USD             1.12915 | 1.1230

EUR/JPY               138.805 | 138.62

AUD/USD            0.7340 | 0.7285

NZD/USD             0.6638 | 0.6607

USD/CAD             1.3109 | 1.3078

EUR/CHF              1.0795 | 1.0775

USD/CHF             0.95945 | 0.9561

GBP/USD             1.5698 | 1.5681

EUR/GBP             0.71935 | 0.71585

For Today

• EUR: A quiet start to the session saw the market moving around the 1.1240 opening levels and moved into the Tokyo session doing very little, the release of CNY numbers with the Caixin flash manufacturing PIM hitting at 47.1 vs. the estimated 48.2, this saw the market reacting across the board with the Euro breaking up through the 1.1250 levels to push quickly to 1.1280’s before holding around the level for a couple of hours, having peaked around the 1.1290 level the market then started to drift in the run to the grey hours. Topside offers into the 1.1300 levels however, even through the level the market is likely to see continuous selling in patches through to the 1.1400 levels with the topside offers around 1.1430-40 areas likely to be the major sticking point. Downside bids light through the 1.1200 areas with better bids likely around the 1.1150 areas however, the move has been fairly strong over the past couple of days and while Greece again moves from tragedy to tragedy is more of an internal matter and has little impact on the bailout deal however, the economics could unravel if Greece were to increase its instability, maybe something for the future bailouts. SNB reiterates its willingness to intervene in the markets if necessary and the USD off situation with doubts about the timings of any rate rise added to instability on the Korean peninsula leaves the USD in a weaker position than the start of the week.
• GBP: Cable traded quietly with little to directly affect the market, EURGBP moved higher through the session pushing towards the 0.7200 levels with the Euro movement and Cable finding further resistance to the 1.5700 levels surprisingly. Topside offers into the 1.5700 levels seem obviously key to any further upside movement, a push through the 1.5710-20 areas will likely see further limited selling to the 1.5750 areas before the market opens for a fresh test above 1.5800 areas and the high range from June. Downside bids light into the 1.5650 areas however, the market has been stuck for the most part in the 1.5550-1.5650 range for several weeks and this congestion is likely to continue to dominate the market for the time being.
• JPY: The USDJPY opened around the 123.40 areas and held the levels into the Tokyo session with little movement in the market the release of the Chinese numbers and a falling SHCOMP which dipped through the 200 DMA and JPY buying started to kick in as uncertainty grows in the EM market and safe haven buying of JPY pushes the USDJPY through the bids to the 122.80 levels before finding sufficient bids to stall the market. Downside bids into the current lows and a push through the 122.70 areas is likely to see light stops likely to open a downside test towards the 122.00 areas and a possibility of large stops through the level and opening July’s lows. Topside offers light through to the 124.00 areas where short term types are likely to again be sellers with stronger offers likely around the 124.50 and 125.00 areas.
• AUD: The Oz drifted from the opening 0.7340’s dipping to below the 0.7330 level into the Tokyo session before the release of the CNY PMI flash number showing another dip and so the Oz moved quickly through the 73 cent level to again bounce off the 0.7290 areas trading slowly to push back into the 0.7315 areas as the market moves to the grey hours. Topside offers from the 0.7360 area onwards is likely to grow in size as the market moves towards the 74 cent levels, while there is a chance of weak stops through the level further offers are likely to be strong from the 0.7440 areas onwards and only a strong push through the 75 cent level is likely to open the topside for a move into last months early ranges. Downside bids see’s bids from the current lows with those bids likely to be dominant until the market pushes through the 0.7240-50 areas and stops then are likely to open up a test to the 72 cent area.

Overnight News

KRW:

1. Korea’s Kim Jong Un Orders Army Into ‘State of War’: Xinhua

North Korea’s Kim Convenes Emergency Meeting over Border Firing

S.Korea Warns N.Korea of Retaliation against Any Attack: Yonhap

South Korea Says North Korea Yesterday Sent Fax Seeking Talks

CNY:

Caixin China Aug. Flash Manufacturing PMI 47.1; Est. 48.2

Yuan Weaker Link With Dollar May Help Bid to Join SDR: NBD

China Should Manage Maturity Mismatch of Local Debt: Sec. News

PBOC Raises Yuan Reference Rate by 0.08% to 6.3864/USD

JPY:

Japan urges China to proceed towards market-based FX system

Nikkei Japan Aug. Flash Manufacturing PMI 51.9 vs 51.2 in July

JPY/INR:

Japan Prime Minister Abe May Visit India in Dec., Mainichi Says

NZD:

NZ Immigration Rises on Returning Citizens, Student Visas

RBNZ Delays Implementation of New Lending Rules by One Month

EUR:

Greece’s PM Tsipras resigns and calls snap election

Today’s data

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

06:00     EUR        German GfK Consumer Sentiment Sep C 10.2 | P 10.1

08:30     GBP       Public Sector Net Borrowing (GBP) Jul C -2.3B | P 8.6B

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

12:30     CAD       CPI Y/Y Jul C 1.40% | P 1.00%

12:30     CAD       BoC CPI Core M/M Jul C 0.00% | P 0.00%

12:30     CAD       BoC CPI Core Y/Y Jul C 2.40% | P 2.30%

12:30     CAD       Retail Sales M/M Jun C 0.30% | P 1.00%

12:30     CAD       Retail Sales Less Autos M/M Jun C 0.50% | P 0.90%

14:00    EUR       Eurozone Consumer Confidence Aug C -6.9 | P -7.1

Harry Hindsight              

• EUR: Euro’s opened around the 1.1120 areas and rose on the news that the Bundestag had passed the bailout plan for Greece even if it did cause some split within the government. Euro’s quickly rose to the highs for Asia of 1.1145 areas before slowly drifting through the session to trade into the London session testing through the 1.1120’s. The release of German PPI showing a rise against expectations saw the Euro move steadily through to press up against the 1.1180 levels and light profit taking from early buyers, the breakthrough came with a weaker than expected leading indicator number in the US and the market quickly pushed through to test the 1.1220, late buying in the futures market then saw the market push to the 1.1240 level into the close.
• GBP: Opening around the 1.5685 areas the market briefly flirted with the topside and pushed lightly through the 1.5700 areas before dropping steadily back from the level to hold the 1.5680 areas into the London session, a less than expected retail sales number was sufficient to send the Cable lower and given the movement in the Euro the EURGBP cross forced the Cable led lower triggering weak stops through the 1.5650 areas and pushing into the 1.5610 areas before finding some stability with a better CBI trend number and a steady rise in an empty market back to the 1.5670 levels and into the NYK session, leading indicators helped the Cable to move back to the early ranges and the market settled a little higher on the day. EURGBP pushed through the 0.7100 levels eventually and quickly moved to the 0.7150 level as the Cable dipped and Euro rallied however, having reached there the market held the levels for the most part to run out around the 0.7160 levels into a quiet close.
• JPY: USDJPY traded quietly through from the opening around 123.80 pushing steadily higher through to the London session to touch just below 124.20, London saw the downside tested again in quiet trading however, once the NYK numbers started to impact the downside opened up steadily with light stops through the 123.80 triggered and the market dipped to the 123.60 moving quietly through the level and drifting to hold around the 123.40 areas into the close.
• AUD: Oz pushed off the 0.7350 areas to test 0.7370 into early Tokyo however, once the little push was over with the market drifted lower again before holding around the opening levels into the grey hours, early London sold quickly and the market quickly tested to the 0.7320 areas before moving through into the full session testing through the 0.7290 areas, a weaker Cable and USD saw the Oz starting to recover pushing through into the NYK session to the 0.7330 levels, short covering added to the move and the Oz quickly pushed to 0.7360 areas and having hit the 0.7360 areas the market started to drift to the close.

Yesterday’s premiership results

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

CHF        Trade Balance (CHF) Jul A 3.74B | C 2.59B | P 3.58B | R 3.51B

EUR        German PPI M/M Jul A 0.00% | C -0.10% | P -0.10%

EUR        German PPI Y/Y Jul A -1.30% | C -1.40% | P -1.40%

GBP       Retail Sales M/M Jul A 0.10% | C 0.20% | P -0.20% | R -0.10%

GBP       CBI Trends Total Orders Aug A -1 | C -5 | P -10

CAD       Wholesale Sales M/M Jun A 1.30% | C 1.00% | P -1.00%

USD       Initial Jobless Claims (AUG 15) A 277K | C 272K | P 274K | R 273K

USD       Leading Indicators Jul A -0.20% | C 0.20% | P 0.60%

USD       Philly Fed Survey Aug A 8.3 | C 6.2 | P 5.7

USD        Existing Home Sales Jul A 5.59M | C 5.41M | P 5.49M | R 5.48M

Good Luck,

Andy

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