Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 121.026 | EURUSD 1.1245 | AUDUSD 0.71664 | NZDUSD 0.6464 | USDCAD 1.31975 | USDCHF 0.96645 | GBPUSD 1.54023 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.32 | 120.87

EUR/USD             1.1269 | 1.1233

EUR/JPY               136.475 | 135.95

AUD/USD            0.7206 | 0.7161

NZD/USD             0.6506 | 0.6466

USD/CAD             1.3208 | 1.3167

EUR/CHF              1.0870 | 1.08495

USD/CHF             0.96665 | 0.96475

GBP/USD             1.5442 | 1.5404

EUR/GBP             0.7301 | 0.7288

For Today

• EUR: Questions about the GDP of China drifted into the market with several banks indicating much lower numbers, this may have had some limited reaction to the equity markets which overall have again turned negative over the course of the session and the USD has generally declined, opening around the 1.1240 areas and drifting around the area deep into the session before the market in Euro’s started to lift into the 1.1260’s. Topside offers into the 1.1280 levels and with the 200 hourly MA moving close to that level it may cause some limited resistance however, this will likely to be dependent on the plethora of numbers today in the Eurozone and US. A push through the light offers into 1.1300-10 200DMA will likely see small stops appearing before running to further light offers into the 1.1360 and the topside again open with little defence until towards the 1.1500 areas. Downside bids into the 1.1200 levels that being the topside of the previous range from earlier in the month with some light congestion through to the 1.1150 areas the market opens only to the 1.1100 before better bids are likely to appear.
• GBP: EURGBP cross held in a tight range and Cable moved steadily higher from the opening 1.5400 areas and to the 1.5440 level over the course of the session. Topside offers are likely into the 1.5480 levels and those offers are likely to be a little stronger as the market pushes through the 1.5500 level before the market opens with weak stops possibly building through the 1.5510-20 areas and opening up a move to the 1.5560-80 levels and then through a weakly defended 1.5620-40 area. Downside bids through the 1.5400 level with a break down through the 1.5370 area likely to open a large decent to a stronger level into the 1.5200 levels.
• JPY: USDJPY had a limited day, opening around the 121.00 levels and then having risen to the 121.20 areas before the market dipped back through 121.00 as the Nikkei held for the most part through the session against the back drop of everyone else being red, the market again pushed higher to extend the high to above the 121.30 level however, the market never really got going and one assumes it being Friday the market is possibly a little jaded and the most traders will be happy with the break. Topside offers likely through the 121.40 levels however, the topside is likely to be a little weak with 122.00 areas likely to provide a better area but the move down was sharp the upside is likely to remain weak until closer to the 124.00 levels. The downside offers light bids on a push through the 120.40 and running into the 120.00 and again as with the topside after the shakeup this week the market is likely to struggle more to the downside with light bids likely through to the 119.00 areas.
• AUD: The Oz ran higher in the first half of the Tokyo session moving from the opening 0.7165 level and pushing steadily to above the 72 cent area having seen reasonable buying with all types pushing it higher, having found some resistance the market stalled above the 72 cent level and then slowly drifted lower over the remainder of the session to hold the 0.7180 levels. Topside offers continue above the 0.7200 with a push through the 0.7210 areas likely to see weak stops before the market opens a little to the 0.7240 areas and stronger offers from that point. Downside bids limited around the 0.7160 levels and a push through again opens up the 71 cent for a further test and the downside lows possibly vulnerable on a move to the 0.7070 levels.

Overnight News

Moody’s:

Moody’s Cuts G20 Economies’ Forecast for 2016 to 2.8% From 3.1%

JPY:

Japan July core CPI unchanged from previous year

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

Japan July household spending falls 0.2% vs. yr. ago

Japan’s July Retail Sales Rise 1.2% MoM; Est. +0.6%

CNY:

China Raises Yuan Reference Rate Most Since March to 6.3986/USD

China’s July Industrial Companies’ Profit Falls 2.9% YoY

China Local Govt. Debt Limits are Credit Positive, Fitch Says

China Should Loosen Monetary Policy: Economic Daily

NZD:

RBNZ Bought Net NZ$191 Mln in July, Most in More Than Four Years

RBNZ Says NZD Purchases Don’t Signal Any View on Exchange Rate

S&P Affirms New Zealand AA Foreign Currency Rating, Outlook

GBP:

U.K. Aug. GfK Consumer Confidence +7 vs Est. +4

Today’s data

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

GBP       GfK Consumer Confidence Aug A 7 | C 4 | P 4

JPY         Unemployment Rate Jul A 3.30% | C 3.40% | P 3.40%

JPY         Household Spending Y/Y Jul A -0.20% | C 0.50% | P -2.00%

JPY         National CPI Core Y/Y Jul A 0.00% | C -0.20% | P 0.10%

JPY         Tokyo CPI Core Y/Y Aug A -0.10% | C -0.20% | P -0.10%

JPY         Retail Trade Y/Y Jul A 1.60% | C 1.10% | P 0.90% | R 1.00%

05:45     CHF        GDP Q/Q Q2 C -0.10% | P -0.20%

08:30     GBP       GDP Q/Q Q2 (P) C 0.70% | P 0.70%

09:00     EUR        Eurozone Economic Confidence Aug C 103.8 | P 104

09:00     EUR        Eurozone Business Climate Indicator Aug C 0.34 | P 0.39

09:00     EUR        Eurozone Industrial Confidence Aug C -3.2 | P -2.9

09:00     EUR        Eurozone Services Confidence Aug C 8.8 | P 8.9

09:00     EUR        Eurozone Consumer Confidence Aug (F) P -19

12:00     EUR        German CPI M/M Aug (P) C -0.10% | P 0.20%

12:00     EUR        German CPI Y/Y Aug (P) C 0.10% | P 0.20%

12:30     CAD       Industrial Product Price M/M Jul P 0.50%

12:30     CAD       Raw Materials Price Index M/M Jul P 0.00%

12:30     USD       Personal Income Jul C 0.40% | P 0.40%

12:30     USD       Personal Spending Jul C 0.40% | P 0.20%

12:30    USD       PCE Deflator M/M Jul P 0.20%

12:30     USD       PCE Deflator Y/Y Jul C 0.30% | P 0.30%

12:30     USD       PCE Core M/M Jul C 0.10% | P 0.10%

12:30     USD       PCE Core Y/Y Jul C 1.30% | P 1.30%

14:00    USD       U. of Michigan Confidence Aug (F) C 93.2 | P 92.9

Harry Hindsight              

• EUR: After a quiet Asian session with the Euro slowly rising from the 1.1320 levels to test into the 1.1360 levels into the grey hours, the resurgent equity markets pushed up steadily through the London session and with it the USD, with the Euro dropping back into the pre-opening market dipping through to test the 1.1280 levels and eventually breaking through into the NYK session and triggering weak stops through to the 1.1220’s before stalling briefly and then renewing and pushing steadily towards the 1.1200 as the market continued to retrace much of Monday’s movement as the band aid works for the moment. The market eventually moved off the lows and tested back to the 1.1280 levels only to meet some light resistance and holding from then into the 1.1240 areas to the close.
• GBP: Moving from the opening around 1.5470 the Cable steadily pushed to the 1.5500 areas during the Asian session and held around the area into the London session, into the London session the market slowly moved back to the 1.5480 levels and only as the equity market started to improve did the USD start to move with the EURGBP cross losing ground as the GBP moved unwillingly lower with the drag of the Euro, the move through into the NYK session saw Cable trade to the 1.5370 levels deep into the session and towards the end of the London session before the market recovered a little to trade back above 1.5400 and held the 1.5400-20 into the close. As moves go it was orderly and in line with the Cables recent ability to ignore everything around it.
• JPY: Early buying from the opening around the 120.00 levels and pushing towards the 120.40 areas before the Tokyo opening and the market retracing to the 119.80 levels with mixed views and the market trading in a tight range from that point onwards and into the London session pushing again to the lows, London were quick buyers as the market in Equity’s began to rise and the USDJPY this time managed to push to the 120.50’s before again drifting to the NYK session, strong equity buying in the US finally saw the USDJPY break higher trading solidly to the 120.80 levels and then stops kicking in to quickly push through the 121.00 areas and to the 121.40 level highs. The again drifted as did the equity markets before bouncing to a close just above the 121.00 level from the 120.60 areas. Strong GDP numbers helped the equity market and the USD in general with a better than expected number with the revision to 3.7% with final sales revised from 2.4% to 3.5%.
• AUD: The Oz saw light trading around the 0.7120 levels in early trading before breaking higher to test the 0.7150 levels before failing the level and drifting back after the initial buying subsided after the Kuroda comments triggered strong AUDJPY buying. The fall back was steady pushing through the opening and triggering weak stops through the opening 0.7120 levels and the market touched to the 0.7100 levels before moving into early London and quick buying to take the market back to the highs a pause and then a push to the 0.7170 level, the market then drifted into the US session with equity’s and Oil prices triggering further buying however, the session was limited and the market was unable to move only to 0.7180 before funning out of time.

Yesterday’s premiership results

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

EUR        Eurozone M3 Y/Y Jul A 5.30% | C 4.90% | P 5.00%

USD       GDP (Annualized) Q2 (S) A 3.70% | C 3.20% | P 2.30%

USD       GDP Price Index Q2 (S) A 2.10% | C 2.00% | P 2.00%

USD       Initial Jobless Claims (AUG 22) A 271K | C 275K | P 277K

USD       Pending Home Sales M/M Jul A 0.50% | C 1.50% | P -1.80% | R -1.70%

Good Luck,

Andy

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