Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 121.712 121.55-75 | EURUSD 1.11837 1.1171-74 | AUDUSD 0.71712 0.7141-75 | NZDUSD 0.64632 0.6435-94 | USDCAD 1.3202 1.3200-10 | USDCHF 0.96268 0.9606-535 | GBPUSD 1.5392 1.5381-1.5404 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.74 | 120.88

EUR/USD             1.1262 | 1.1162

EUR/JPY               136.295 | 135.75

AUD/USD            0.7177 | 0.7125

NZD/USD             0.6472 | 0.6409

USD/CAD             1.3252 | 1.3200

EUR/CHF              1.0799 | 1.07685

USD/CHF             0.9639 | 0.9588

GBP/USD             1.5437 | 1.5381

EUR/GBP             0.7294 | 0.7246

For today

• EUR: Mixed commentary from Jackson hole set the USD on a slow drift lower, with both the ECB and the BoE saying that see inflation rising so chances sooner rather than later? The early market thinks so and the Euro’s rose from the opening levels to push steadily from a low opening into the 1.1200 levels on the Tokyo opening to test higher steadily through the session to push at the 1.1250 areas. Light offers are likely into the 1.1260 levels with better offers possibly into the 1.1300-20 areas with a push through the levels likely to trigger weak stops and the market opening to the 1.1350 areas with further light offers with possibly stronger levels into 1.1400. Downside bids light through the 1.1200 level with stronger bids protecting a deeper move lower around the 1.1150 areas with potential stops through the level and an opening to the 1.1100 levels.
• GBP: Cable opened a little higher and traded with the Euro slightly higher pushing through into the mid 1.5430’s, losing ground against the Euro the cross EURGBP moving off a low opening of 0.7250 to trade steadily higher and push towards the 0.7300 levels into the grey hours. Topside offers into the 1.5450 levels before opening to possibly better offers into the 1.5500 levels and then possibly more movement available to the 1.5600 areas. Downside bids light into the 1.5400 levels with the market then opening to the stronger bids around the 1.5350 area and last week’s lows before opening up the 1.5200 areas for a test.
• JPY: USDJPY opened above the 121.80 levels before trading quickly through to the closing levels around the 121.40 areas, from the Tokyo opening the decent slowed but didn’t stop and the market traded steadily to test through the 121.00 levels to hold around the 120.90 areas. Downside bids are likely to continue through the 120.80 levels with a push to the 120.60 likely stops through the level opens the 120.20 areas and fresh bids likely and those may be a little deeper. Topside bids through the 121.70 levels are likely to be fairly strong into the 122.00 areas with stops likely close behind and the market opening to the 124.00 areas and the ranges from a week ago.
• AUD: The Oz suffered as much as the USD as commodity currencies traded poorly against everything else, opening around the 0.7155 areas the market initially closed the gap on the charts before dropping back before the Tokyo session to the 0.7140 areas, the market has continued to hold in the area rising as different crosses focused the market however, the Oz traded for the most part in a tight range trending lower over the course of the session, Topside offers likely to be lighter to the 72 cent level and then showing some resistance on a move through with weak stops likely through the 0.7220 areas however, if everything plays as normal the market is likely to see a continuation of light offers once those weak stops are out of the way and a break through the 0.7260 areas is possibly the point where the market can again test the 73 cent levels, through that level the market is likely to see further offering moving in and the market stalling. Downside bids into the 0.7100-0.7070 levels and a struggle to break through the lows a push through the 0.7050 level is likely to see some stops appearing in the market and possibly only an option play to protect the 70 cent level before the downside opening for a test through to new ranges.
• Commentary: From the Jackson Hole meeting saw SNB president Thomas Jordan reiterate his pledge to intervene in currency markets if the CHF continues to strengthen.

Overnight News

CNY:

China Said to Abandon Large-Scale Share Purchases: FT

China Said to Ask Brokerages to Boost Market and Buy Back Shares

China 2015 Industrial Output Growth May Slow to 8%: 21st Herald

JPY:

Japan’s July Industrial Output Falls 0.6% M/M; Est. +0.1%

AUD:

Australia’s July Private New Home Sales Fall 0.4% M/m

Australia’s Aug. TD Monthly Inflation Gauge Rises 0.1% M/m

Australia July Credit to Business, Consumers Rose 0.6% M/M

NZD:

Key Says N.Z. Economy Faces Headwinds From Dairy, China Outlook

N.Z. Treasury Says Annual Growth May Slow to 2% in 2015

N.Z. Home-Building Approvals Surge to 10-Year High

Today’s data

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

NZD       Building Permits M/M Jul A 20.40% | P -4.10% | R -3.30%

JPY         Industrial Production M/M Jul (P) A -0.60% | C 0.10% | P 1.10%

AUD       TD Securities Inflation M/M Aug A 0.10% | P 0.20%

NZD       NBNZ Business Confidence Aug A -29.1 | P -15.3

JPY         Housing Starts Y/Y Jul A 7.4% | C 11.00% | P 16.30%

6:00        EUR        German Retail Sales M/M Jul C 1.30% | P -2.30%

7:00        CHF        KOF Leading Indicator Aug C 100.3 | P 99.8

9:00        EUR        Eurozone CPI Estimate Y/Y Aug C 0.10% | P 0.20%

9:00        EUR        Eurozone CPI – Core Y/Y Aug (A) C 0.90% | P 1.00%

12:30     CAD       Current Account (CAD) Q2 C -$17.00B | P -$17.50B

13:45     USD       Chicago PMI Aug C 54.7 | P 54.7

Weekend News

USD/EUR/GBP:

Fed, ECB, BOE Officials All Say They See Inflation Rising
USD:

Fischer Sees Good Reason to Believe U.S. Inflation Will Rise
GBP:

Carney: China Developments Unlikely to Change BOE Rate Path
CNY:

Yuan Doesn’t Have Basis for Continuous Depreciation: Premier Li
China Regional Debt Surges 34% in 18 Months, Xinhua Says
Former PBOC Adviser Li Says China Growth Still on Target for 7%
China Bank Lending Cap Scrapped by Top Legislature, Xinhua Says
USD/CNY:

U.S. Should Declare China Currency Manipulators, Graham Says
JPY:

Japan Has 50% Odds of Deflation by 2020, U.S. 15%: Jackson Hole
EUR:

Greece’s Syriza Party Has 1.5 Point Lead in Alco Poll: Thema
Tsipras Says Will Get Strong Mandate in Greek Elections: Real
Greece’s Tsipras Says Euro Exit Would Mean ‘Mass Suicide’
CHF:

SNB’s Jordan Calls Franc Markedly Overvalued: NZZ am Sonntag
SNB Jordan Says Negative Rates to Be Around for Some Time: NZZ
HKD:

Hong Kong Financial Secretary Changes 2015 Growth Forecast
SEK:

Swedish Govt. Left Party Reach Budget Deal: Svenska Dagbladet
TRY:

Turkey Central Bank Imposes New Steps to Prepare for Fed Moves
Turkey Central Bank Boosts Lenders’ FX Transaction Limits 130%

Harry Hindsight

• EUR: Jackson Hole was the main focus of the day and expectations for the weekend. The session opened with the market around the 1.1240 levels and a lacklustre performance through the Asian session with the market drifting deep into Tokyo before buyers moved into the market and pushed the Euro towards the 1.1270 levels into the grey hours, early London bought the Euro before the Eurozone numbers and the market moved steadily through the 1.1300 levels before abruptly halting around 1.1310 and then retracing the whole move over the course of early London and into the NYK session, confidence numbers were mixed at best however, German CPI numbers showed a better than expected number but still down MoM and the Euro traded through the NYK open and continued to move south, the push through the 1.1220 levels saw a late run in London before closing for a long weekend for most and the Euro triggered weak stops and quickly touched through the 1.1160 level before finding sufficient support in the area to stop the rot from continuing, a minor bounce saw the market quickly move to 1.1220 before dropping back to trade to the close below the 1.1200 levels.
• GBP: As with the Euro the Cable traded quietly in the early part of the Asian session holding around the 1.5410 levels before rising slowly to the 1.5440 level and holding there until the grey hours, and early selling from the pre London players started the market drifting lower, a GDP number in line with expectations did very little to excite the market with a minor gyration first heading to the topside but unable to reach the 1.5440 highs before dropping back to test into the 1.5360 levels and then sideways into the NYK session, USD gained through the NYK session initially with Cable slipping down to the 1.5340 levels however, the move was less exaggerated than the Euro move and once London closed for a long weekend the market slowly recovered to the 1.5400 levels for the close. EURGBP had its moments through the session with the market in Asia flat and holding just below the 0.7300 level into the grey hours, the market then rose steadily as the Euro gained limited ground and took the market to above 0.7350 in the cross with some weak stops being triggered above the 0.7340 areas before slipping back to 0.7320 and then the USD rally started to move in once London left and the EURGBP reversed triggering weak stops through the 0.7310 areas and falling back quickly to 0.7270 as the Euro fall outstripped the GBP, the market eventually traded down to the 0.7260 levels before the close with light profit taking moving it off its lows.
• JPY: A quiet day overall for the USDJPY with the market moving around the 121.00 areas during Asia with only one strong attempt to move higher halted near the 121.30 areas, grey hour selling saw the USDJPY dropping back to hold around the 120.80 levels for the early London session with the market improving into the NYK session and a steady rise higher to hold around the 121.40 into the later part of London and mid-way through the NYK session, a quick flurry towards the close saw the high of the day just short of the 121.80 levels but nothing overly convincing.
  AUD: A mixed session for the Oz before ending around flat for the day, moving off the 0.7165 areas the market traded higher as early buyers pushed the market through the 72 cent level, and while the market didn’t push to far given the types of buyers which seemed more or less all classes it did clear out a reasonable amount of offers through the level before slipping just as quietly back to the opening areas and into the London session, the market struggled to maintain its levels peaking again around the 0.7180 levels before the selling pushed to the 0.7160 and weak stops testing the 0.7140 levels quickly, the market remained under pressure dipping into the 0.7120 areas several times before late buying started to move the market from the London close to finish quietly unchanged on the day.

Friday’s premiership results

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%

CHF        GDP Q/Q Q2 A 0.20% | C -0.10% | P -0.20%

GBP       GDP Q/Q Q2 (P) A 0.70% | C 0.70% | P 0.70%

EUR        Eurozone Economic Confidence Aug A 104.2 | C 103.8 | P 104

EUR        Eurozone Business Climate Indicator Aug A 0.21 | C 0.34 | P 0.39 | R 0.41

EUR        Eurozone Industrial Confidence Aug A -3.7 | C -3.2 | P -2.9

EUR        Eurozone Services Confidence Aug A 10.2 | C 8.8 | P 8.9

EUR        German CPI M/M Aug (P) A 0.00% | C -0.10% | P 0.20%

EUR        German CPI Y/Y Aug (P) A 0.20% | C 0.10% | P 0.20%

CAD       Industrial Product Price M/M Jul A 0.70% | C 0.10% | P 0.50%

CAD       Raw Materials Price Index M/M Jul A -5.90% | C -4.00% | P 0.00%

USD       Personal Income Jul A 0.40% | C 0.40% | P 0.40%

USD       Personal Spending Jul A 0.30% | C 0.40% | P 0.20% | R 0.30%

USD       PCE Deflator M/M Jul A 0.10% | P 0.20%

USD       PCE Deflator Y/Y Jul A 0.30% | C 0.30% | P 0.30%

USD       PCE Core M/M Jul A 0.10% | C 0.10% | P 0.10%

USD       PCE Core Y/Y Jul A 1.20% | C 1.30% | P 1.30%

USD       U. of Michigan Confidence Aug (F) A 91.9 | C 93.2 | P 92.9

Stay lucky

Andy

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