Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.069 | EURUSD 1.11238 | AUDUSD 0.70179 | NZDUSD 0.63941 | USDCAD 1.31799 | USDCHF 0.97316 | GBPUSD 1.52573 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.19 | 119.10

EUR/USD             1.1140 | 1.1116

EUR/JPY               133.64 | 132.62

AUD/USD            0.7022 | 0.6959

NZD/USD             0.6398 | 0.6352

USD/CAD             1.3224 | 1.3177

EUR/CHF              1.08385 | 1.0802

USD/CHF             0.9743 | 0.96985

GBP/USD             1.5260 | 1.5227

EUR/GBP             0.7315 | 0.7286

For Today

• EUR: Limited action and considering the dovish comments on from Draghi yesterday the market was unable to find direction for the final day of the week however, with little difference to what the market already knew and really very little room to manoeuvre it leaves the market more or less ignoring the commentary, now maybe that is a good thing and the market should be focused on the US lift off whenever that is likely to occur. The market opened on the 1.1120 levels and managed to move through the session between that and the 1.1130 before lifting further as the market moved towards the grey hours and possible better movement attracting early Europeans and looking to move into the 1.1140 levels with the possibility of light offers through the level to the 1.1150 areas before opening the market to weak stops possibly through 1.1160 and a return to the 1.1220 levels, from there the market remains likely to be offered through to the 1.1260 levels with a mixture likely beyond to the 1.1280 areas and into the 1.1300 and possibly stronger offers for the moment, downside bids into the 1.1100 levels are likely to continue to the 1.1070 levels before stops are likely to appear and this will then likely open the market for a downside push back into the ranges earlier in the month however, 1.1050 and 1.1000 are likely to slow any descent unless there is a really poor Eurozone retail PMI or NFP is unexpectedly stronger.
• GBP: Cable slowly drifted through the session with yesterday’s PMI’s still causing some concerns in the market however, the rise of the EURGBP was more the cause of todays movements with the market again moving back above the 0.7300 levels, Cable opened around the 1.5255 areas and drifted down to the 1.5230 areas into the later part of the session and currently holds the level as the market moves towards the grey hours. Topside offers likely into the 1.5290 areas and through the 1.5300 level, a possibility of weak stops on a push above the 1.5290-1.5300 level however, the offers are likely to reappear through the 1.5320 areas and slow the market in light trading, a push through the level though with topside offers likely to be light until the congestion appears around the 1.5400 levels. Downside bids are likely to and through the 1.5200 levels and are likely to be a key level for the moment with the market on a break through the 1.5180 level likely to open up a deeper move and a potential for testing the 1.5000 ranges.
• JPY: Today is again risk off to some extent with equity market turning steadily red over the course of the session with US analysis suggesting that the clear out of funds from the EM area is likely to continue although with not quiet the size that the market saw over a week ago however, this has been sufficient to send the market steadily lower in the equities and this towards the end of the session triggered retail margin calls and the AUDJPY was effectively sold, USDJPY therefore has spent its time drifting from the Tokyo open to push through the opening 120.10 levels and steadily move in steps through light bids to test into the 119.10 levels before finding some respite as the market moved into the grey hours, Topside offers are light into the 119.80-120.00 levels with possible weak stops through the level before finding light offerings again from the 120.40 level for a brief period, a strong push higher would still have to contend with the likelihood of stronger offers into the 120.70-121.00 levels however, while those offers are likely to continue through the level there could be a possibility of the market moving rapidly higher if there was enough impetus through the 121.50-80 levels, I wouldn’t call it a short squeeze but with the likelihood of less offers to the topside than you would normally expect and NFP its worth noting. Downside bids below the current levels however given that the equity market is again struggling the bids into the 119.00 are open to be tested and a strong push through will open up limited bids into the 118.50 areas and again the downside to 118.00 could quickly buckle however, this is dependent on a nervous market moving into the NFP.
• AUD: The Oz maintained its opening levels and peeked above the 0.7020 levels in early trading however, as the equity markets began to turn red so the pressure on USDJPY and this manifested in steady AUDJPY carry trade selling moving into the market, the Carry trade dropped steadily lower moving away from the 84.40 level it had briefly looked like testing, and moving through the levels to test into the 83.00 area before visible support moved in. While the fall of the USDJPY as safe haven flows moved into the market took some of the sting the Oz was not immune to the move and it eventually pushed through the 70 cent level to test the 0.6990 levels again this time triggering weak stops and the market quickly dipped to the 0.6960 levels before finding support to slow the market and holding into the grey hours ranging from that low to the 0.6975 levels. Topside offers likely to remain through the 70 cent level to 0.7020 before possible very weak stops through there and opening a test to light offers from 0.7040 and possibly increasing to better ones through 0.7060, a push through this level though is likely to see stronger stops appear and a test to the 71 cent level and through a distinct possibility and an opening to the 72 cent levels, Downside remains bid for the moment with these levels finding locals more inclined to buy than most and long term shorts slowly taking profit throughout the current weakness however, a strong push through the 69 cent level does have the potential to open up a larger move and the 65 cent level then starts to look of importance for the Oz in the long term.

Overnight News

G20:

G20 Sees Possible Rate Increase as Source of Uncertainty: Draft

Lew to Meet at G-20 With Chinese, German, Japanese Counterparts

JPY:

Amari: Volatility in Stock Markets Not Reflecting Fundamentals

JPY/KRW:

Japan’s Abe, S. Korea’s Park Set to Hold First Summit: Mainichi

USD:

Kocherlakota Repeats Call for No Fed Interest-Rate Rise in 2015

Kocherlakota Doesn’t See Big Risk of Rapid Asset Price Decline

IDR/CNY/JPY:

Indonesia Invites China, Japan to Discuss High-Speed Train

RUB:

Russia’s 2016 Budget Assumes Oil at $50/bbl, Belousov Says

Today’s data

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

JPY         Labour Cash Earnings Y/Y Jul A 0.60% | C 2.40% | P -2.40%

06:00     EUR        German Factory Orders M/M Jul C -0.60% | P 2.00%

06:00     EUR        German Factory Orders n.s.a. Y/Y Jul C 0.30% | P 7.20%

07:15     CHF        CPI M/M Aug C -0.20% | P -0.60%

07:15     CHF        CPI Y/Y Aug C -1.40% | P -1.30%

08:10     EUR        Eurozone Retail PMI Aug P 54.2

12:30     USD       Change in Non-farm Payrolls Aug C 220K | P 215K

12:30     USD       Unemployment Rate Aug C 5.20% | P 5.30%

12:30     USD       Average Hourly Earnings M/M Aug C 0.20% | P 0.20%

12:30     CAD       Net Change in Employment Aug               C -2.5K | P 6.6K

12:30     CAD       Unemployment Rate Aug C 6.80% | P 6.80%

14:00    CAD       Ivey PMI Aug C 53.5 | P 52.9

Harry Hindsight              

• EUR: Euros’ limped along during the Asian session drifting initially through to test the 1.1210 areas before bouncing back on the Oz retail numbers but only moving back to the 1.1220 area and trading into the London session holding those levels in quiet trading. The move into the grey hours saw the market move a little higher and the market into the London session moved to test the 1.1240 areas however, mixed PMI numbers left the market very little changed and once everything was out in the market the market again drifted through the session and into the NYK session, decent initial claims a slightly better and trade balance figures better than expected saw the USD rally and the Euro drop quickly from above the 1.1230 levels to fall to the 1.1120 before bouncing once, as ECB commentary mainly dovish caused more uncertainty in the market leading to the market to follow through to test below 1.1100 briefly before rising again and holding the 1.1120 levels from then to the close in quiet trading.
• GBP: Cable pushed to above the 1.5310 levels after a quiet opening around the 1.5300 level, and from the highs the market drifted lower through the 1.5300 levels and the market continued drifting slowly lower through to the PMI release in the UK with the services number coming in lower and setting the market moving to test the 1.5240 levels before bouncing back and pushing to the 1.5280 levels and held the level into NYK and again solid selling in the Euro took the cross down dragging a little on the Cable to make fresh lows around the 1.5220 and possibly a lot of congestion cleared, the market eventually rose back to the 1.5250 areas for a slow close.
• JPY: Early trading saw the USDJPY move quickly from the opening 120.30 levels to test above 120.60 with the market struggling for several hours to push through the 120.70 levels, the market then dipped back to the 120.30 levels have failed to break through but again attempted to test higher once the Oz numbers were digested and the market then drifted lower from again testing that topside resistance failing for a second time the market began drifting deep into the London session and only the ECB news and the data releases in the US, the market stabbed lower with strong EURJPY selling and the market held the 119.70 levels and bounced back to the starting levels however, having opened the downside a little the market again tested to the 119.80 levels again before trading steadily to above the 120.00 levels to finish 20 pips short of the opening levels.
• AUD: The Oz moved from the opening 0.7040 levels and steadily rose before stabbing to above the 0.7060 levels and then drifting into the Oz data, a better trade balance and a poor retail sales number saw the market drop quickly to the 70 cent levels before holding for several hours and then dipping through into the grey hours to test just below 70 cent, early London were buyers and took the market back to 0.7020 however, the day traders didn’t have it all their own way and the market struggled to push too much further and the market then remained in the 0.7000-0.7020 levels, ECB commentary and the US numbers saw the Oz rise quickly as EURAUD buying kicked in with a strong USD eventually curbing the rally in Oz however, not before the Oz again tested into the 0.7060 levels before dropping back to the previous 0.7020 levels and a quiet session to the close.

Yesterday’s premiership results

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

AUD       Trade Balance (AUD) Jul A -2.46B | C -3.10B | P -2.93B | R -3.05B

AUD       Retail Sales M/M Jul A -0.10% | C 0.40% | P 0.70% | R 0.60%

EUR        Italy Services PMI Aug A 54.6 | C 53.1 | P 52

EUR        France Services PMI Aug (F) A 50.6 | C 51.8 | P 51.8

EUR        Germany Services PMI Aug (F) A 54.9 | C 53.6 | P 53.6

EUR        Eurozone Services PMI Aug (F) A 54.4 | C 54.3 | P 54.3

GBP       Services PMI Aug A 55.6 | C 57.6 | P 57.4

EUR        Eurozone Retail Sales M/M Jul A 0.40% | C 0.60% | P -0.60%

USD       Challenger Job Cuts Y/Y Aug A 2.90% | P 125.40%

EUR        ECB Rate Decision A 0.05% | C 0.05% | P 0.05%

CAD       International Merchandise Trade (CAD) Jul A -0.59B | C -1.40B | P -0.48B | R -0.81B

USD       Initial Jobless Claims (AUG 29) A 282K | C 273K | P 271K | R 270K

USD       Trade Balance Jul A -41.86B | C -$44.50B | P -$43.84B | R -45.1B

USD       ISM Non-Manufacturing Composite Aug A 59 | C 58.3 | P 60.3

Good Luck,

Andy

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