Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.881 | EURUSD 1.15155 | AUDUSD 0.71298 | NZDUSD 0.64827 | USDCAD 1.33394 | USDCHF 0.93919 | GBPUSD 1.56862 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.655 | 118.45

EUR/USD             1.15615 | 1.14935

EUR/JPY               137.55 | 136.74

AUD/USD            0.7157 | 0.7097

NZD/USD             0.6511 | 0.6465

USD/CAD             1.3350 | 1.3306

EUR/CHF              1.08555 | 1.0824

USD/CHF             0.9443 | 0.9385

GBP/USD             1.5721 | 1.5683

EUR/GBP             0.7362 | 0.73195

For Today

• EUR: The USD throughout the session was solidly attached to the movements in the equity markets causing the market to chop around in a reasonably tight range, moving from the opening around the 1.1520 areas the market moved through to Tokyo trading a tight 1.1510-40 range before moving quickly to the 1.1560 level as EURJPY fixing demand pushed the market to its highs, the move was short lived and with the equity markets again turning green the Euro dropped back again to test into the lows. Volumes were reasonable into the early part of the session however the market eventually started to Peter out and started to trade narrowly around the 1.1520 areas the closer we moved to the grey hours. Topside offers light into the 1.1580 levels with possible better interest into the 1.1600 levels however, a move through the 1.1610 areas is likely to see weak stops appearing with the market then open for a test into the 1.1660 areas and then the topside vulnerable to further gains through to the 1.1700 levels. Downside bids light into the 1.1500 areas and the possibility of light stops through the 1.1480 areas and only the downside then weak to the 1.1420 levels and possibly through to 1.1390-80 areas before the downside opens with no real firm levels until light bids into the 1.1300 and the potential for the market to move deeper and back to the levels of last week.
• GBP: The market opened in the quiet tight range the market had seen in the several hours to the NYK close, moving around the 1.5700 levels, the market briefly flirted with the levels just below the 1.5690 areas but late into the session saw reasonable EURGBP selling taking the Cable to the 1.5720 levels before the move was over and the market again began to drift, Cable for the most part remained impartial to the equity moves and while its stepped a little higher remains in a tight range heading into the grey hours. Topside offers are now a little thin to the 1.5800 levels and although the 1.5800-20 area is likely to see light offerings the market has the potential to push to the 1.5900 level on a breakthrough that area with the likelihood of stronger offers as the market approaches those highs of the year. Downside bids likely to the 1.5680 areas with weak stops a possibility through the level and then the market is in the 1.5650-1.5550 range that the market spent so long trading in over the past few weeks, a strong push through the downside opens up the possibility of another leg down however, there is likely to be plenty of congestion if nothing spectacular occurs.
• JPY: A choppy session with the market rising from the opening below 119.00 to push quickly to the 119.50 levels as the first flash of green in the Nikkei appeared, this was short lived and the market then traded steadily lower through into the Tokyo session, trading to the 118.50 levels before again finding impetus from the rising Nikkei to push back through the 119.00 level and to remain above there for the most part during the remainder of the session, as the Nikkei continued to strengthen the USDJPY again made moves towards the 119.50 levels pushing through into the last few minutes before the grey hours. Topside offers into the 120.00 areas are likely to continue into the 120.20 areas before thinning out and leaving the market with a likely mixture of weak stops and light offers to the 120.40 areas, a push through this level will see stops appearing to dominate and the market open for a test into the 121.00 areas before the chance of resistance moving in. From the 121.00 level onwards the market is likely to see only token offers around the levels and the old range above 124.00 could well be easily accessible. Downside bids into the 119.00 are light and although there is a possibility of weak stops through the 118.70 areas I’d suspect stronger bids appear from the 118.50 levels and onwards into 118.00 however, as we’ve seen already the downside is vulnerable to deep moves on a breakdown again and could possibly test through the years lows if the market gained momentum.
• AUD: The Oz struggled in the move into Tokyo with the Spi’s remaining red for the most part, the move into the green with the help of the Nikkei saw the market push from the lows just below 71 cent to trade back through the opening levels to range in the 0.7130-40 areas late into the session with highs testing towards 0.7150 in a reasonably quiet day. Topside offers likely through to the 0.7160 levels however, these are probably light and only a push to the 0.7240 area will start to see meaningful resistance with light stops on a break above the 0.7260 areas a possibility. Downside bids into the 71 cent level remain however a good push through will open up further downside potential to test the recent lows of the year and potential option plays into the 70 cent level.

Overnight News

CNY:

MNI consumer sentiment for Aug was up 116.5 from previous 114.5

AUD:

Steven’s in national forum states may be potential growth is a bit lower than thought

Today’s data

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

NZD       Trade Balance (NZD) Jul A -649 | C -600M | P -60M | R -194M

JPY         Corporate Service Price Y/Y Jul A 0.60% | C 0.40% | P 0.40%

AUD       Construction Work Done Q2 A 1.60% | C -1.50% | P -0.80%

06:00     CHF        UBS Consumption Indicator Jul P 1.68

10:00     GBP       CBI Reported Sales Aug C 18 | P 21

12:30     USD       Durable Goods Orders Jul C -0.40% | P 3.40%

12:30     USD       Durables Ex Transportation Jul C 0.40% | P 0.80%

14:30    USD       Crude Oil Inventories P 2.6M

Harry Hindsight              

• EUR: Opening around the 1.1600 levels the market steadily drifted as the market readjusted after the strong moves of the previous 24hrs, moving to the 1.1515 areas into the Tokyo session cross trading through the session dominated at times particularly in the EURJPY which regained much of its losses in early trading to move back above the 138.40 levels with a strong USDJPY rally leaving the Euro vulnerable to the fall back we saw, the move into the grey hours saw only light buying before the drift in the market renewed and the market pushed through the 1.1500 levels triggering light stops and a push into the NYK session to below 1.1400 briefly before the profit taking kicked in and the sudden turn of the equity market into the close in the US. The Euro again moved back above the 1.1500 in late trading before closing around the 1.1520 areas. While the cuts in interest rates may bolster the internal markets it does provide an increasing possibility of re-inflating the balloon that we have seen burst as borrowing becomes cheaper in the face of increasing private debt, not a pleasant thought when we get to the same trigger point in the future.
• GBP: Cable moved quietly through the Asian session moving from the 1.5770 levels testing only a little lower and touching through 1.5750 before rising again to the opening levels into the London session. Steady selling in EURGBP in the London session from the 0.7340 areas saw limited reaction however, Cable did manage to push higher during this period and trade above the 1.5810 levels even if briefly before falling back to the opening levels into the NYK opening. The move into the NYK session saw strong Cable selling and the move back to below the 1.5700 level before the close of London and unlike the rest of the market when equities suddenly started to give up some of the day’s gains Cable was not a currency that rallied and held in the same area to the close again losing ground against the Euro as the cross returned to the Asian levels around the 0.7350 area.
• JPY: A solid recovery from the opening 118.50 levels saw the market start to pick up as soon as the Tokyo session opened trading initially to the 119.00 level triggering weak stops through the level and again into the 119.50 areas, by mid-morning the USDJPY was pushing hard and regained the 120.00 levels as the equity markets across Asia showed signs of recovering and the market held for a good period above the 120.00 areas, the move into the grey hours saw the market falling back with Tokyo lunch and profit taking impacting a steady move back to the 119.00 levels, London were steady buyers as the equity markets held up in the London period and USDJPY pushed to its highs for the day and just fell short of touching the 120.50 levels with limited resistance until that point, NYK opening saw light selling and nothing to earth shattering with the market again drifting back into the 119.50 levels and then ranging for most of the session between 120.00-119.50, late equity selling saw the USD again fall back and the market quickly moved to the 119.00 areas and a drift below the level to finish the day just below the levels.
• AUD: From the opening around the 0.7160 levels the market only had one minor dip then the rally in USDJPY saw the carry trade start to rise and AUDJPY moving quickly higher and a resultant rising Oz to push to above the 0.7230 levels before running out of steam. Having reached that level the move towards Tokyo lunch saw the market steadily drifting and dipping back through the 72 cent level then ranging into the early part of London around that level, buying in the Euro heled take the Oz higher pre-NYK and traded towards the 0.7250 levels to make the highs, from that point onwards the market declined steadily with expectations for Steven’s speech to come and the rate cuts in China falling back to the 0.7140 areas into the close.

Yesterday’s premiership results

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

AUD       Conference Board Leading Index Jun A -0.20% | P 0.20%

CNY        Conference Board Leading Index Jul A 0.90% | P 1.00% | R 0.60%

NZD       RBNZ 2-Year Inflation Expectation Q3 A 1.90% | P 1.90%

EUR        German GDP Q/Q Q2 (F) A 0.40% | C 0.40% | P 0.40%

EUR        German IFO – Business Climate Aug A 108.3 | C 107.6 | P 108

EUR        German IFO – Current Assessment Aug A 114.8 | C 113.9 | P 113.9

EUR        German IFO – Expectations Aug A 102.2 | C 102 | P 102.4 | R 102.3

USD       House Price Index M/M Jun A 0.20% | C 0.40% | P 0.40%

USD       S&P/Case-Shiller Composite-20 Y/Y Jun A 5.00% | C 5.10% | P 4.94% | R 5.00%

USD       New Home Sales Jul A 507K | C 510K | P 482K

USD       Consumer Confidence Aug A 101.5 | C 93.1 | P 90.9

Good Luck,

Andy

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