Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 119.024 118.76-99 | EURUSD 1.11505 1.1159-62 | AUDUSD 0.69096 0.6903-21 | NZDUSD 0.62816 0.6275-0.6307 | USDCAD 1.32766 1.3263-68 | USDCHF 0.97229 0.9712-31 | GBPUSD 1.51706 1.5173-93 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.59 | 118.66

EUR/USD             1.1175 | 1.1142

EUR/JPY               133.305 | 132.67

AUD/USD            0.6949 | 0.6892

NZD/USD             0.6305 | 0.6261

USD/CAD             1.3284 | 1.3250

EUR/CHF              1.0853 | 1.0830

USD/CHF             0.9731 | 0.9709

GBP/USD             1.5202 | 1.5168

EUR/GBP             0.7355 | 0.7335

For today

EUR: G20 was a little more active than you would normally expect however, the focus was on defusing any potential FX wars as the EM markets decouple from pegs or concerns that they will. Euro’s had a little boost from the opening with the open around the 1.1160 levels before dropping back to fill the gap and holding around the 1.1145, Tokyo were strong sellers of the Yen across the board and Euro’s moved quickly to above the 1.1170 levels before running out of steam and drifting back to the 1.1150 levels where the market spent much of the remainder of the session. Light bids into the 1.1100 areas and through to the 1.1080 areas before the market is likely to see stops appearing and the market opening for a test into further strength from 1.1050 onwards and likely to continue to 1.1020 and better bids. Topside offers light through the 1.1100 levels and possibly better offers on a move to the 1.1180 levels and through 1.1200 with weak stops likely to be building above there. However, with Labour Day US bank holiday the market is possibly going to remain quiet.

GBP: Limited action in the Cable with then market opening a little higher and then continuing steadily to test the 1.5200 levels into the Tokyo session before drifting back to hold around the 1.5190 levels. Cable sees weak offers into the 1.5200 levels and continuing through and increasing possibly to stronger 1.5220 with the market then opening to the 1.5250 and possible further offers. Downside bids into the 1.5170 levels with the market again opening for further downside on a push through the 1.5150 areas and possibly better bids into 1.5100 areas.

JPY: USDJPY had a reasonable range considering the market in the US is closed for Labour Day bank holiday, moving from a low opening the market immediately moved to fill the gap and then moved to the 119.20 before Tokyo opened, the move into Tokyo saw the market initially hold the 119.10 areas before the market started to again rise to the 119.30 levels however, at this point the equity market turned lower and so did the USDJPY falling back though the 119.00 levels to test into the 118.80 area and then bouncing on a stronger equity market. Topside light offers into the 119.50 areas and the possibility of weak stops through the area to again open a test through to the 120.20 areas and stronger offers. Downside bids into the 118.80 levels however, a push through the 118.50 level is likely to open up another test to the 116.00 levels that we’ve seen tested a couple of times this year.

AUD: The Oz opened the downside on Friday and has been unable to break through the 69 cent for the moment with the market gradually pushing to the 0.6950 levels before slipping back in quiet trading, the downside while technically open remains balanced as with bids still remaining as yield players continue to buy into weakness, a push through the level though is likely to expose another big figure move and the downside opening to a possible move in the long term to 65 cent. Topside offers into the 0.6950 lightly to be light and the market then opening to 70 cent and stronger offers through the level to 0.7020 and again around the 0.7060-80 areas.

Overnight News

CNY:

China Revises 2014 GDP Growth to 7.3% From 7.4%

China NDRC Expects Aug. Export Growth

China’s Next 5-Yr Plan to Seek Improving Yuan Mechanism: Daily

China’s GDP Growth May Bottom Out in 3Q: Securities Journal

JPY:

Japan Slowing Momentum Threatens Consolidation, Moody’s Reports

AUD:

Australia’s Aug. Construction Index Rises 6.7 Pts M/m to 53.8

Australia Aug. ANZ Job Ads Rise 1.0% vs -0.5% in July

CAD:

Canada Recession Suggests More Low Growth, Moody’s Reports

Today’s data

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

JPY         Leading Index Jul (P) A 104.9 | C 104.9 | P 106.5

06:00     EUR        German Industrial Production M/M Jul C 1.20% | P -1.40%

07:00     CHF        Foreign Currency Reserves Aug P 531.8B

08:30     EUR        Eurozone Sentix Investor Confidence Sep C 16.2 | P 18.4

Weekend News

G20:

G-20 Pledges to Refrain From ‘Competitive Devaluations’
G-20 Seals Currency Peace Pact as China Sets Out Bubble Cleanup
Schaeuble Says G-20 See No Reason to Be Nervous About Growth
CNY:

PBOC’s Zhou Sees No Basis for Long-Term Yuan Depreciation
China Stock-Market Correction Almost Done, Says PBOC Governor
China Market Volatility Nearing End, Says Central Bank Official
Lagarde Says Chinese Economy Going Through ‘Necessary Bumps’
China to Promote Development of Big Data to Boost Growth
USD:

Lagarde Says Fed Must Be Sure of Jobs and Prices Before Moving
JPY/CNY:

Japan’s Aso: Don’t Feel Sense of Being Alone on China Stance
Aso: China’s Zhou Used ‘Burst’ in Explanation at G-20
JPY: Japanese Cos. Expected to Pay JPY3.7t in 1H Dividends: Nikkei
Japan to Propose Reduced Tax Rate on Foods, Nikkei Reports
CNY/MYR:

Bank of China May Seek Stake in Malaysia’s AMMB, Star Reports
CNY/KRW:

China, S. Korea Could Start Talks on Korea Unification: Yonhap
GBP:

Osborne Says U.K. Must ‘Go on Putting Our Own House in Order’
RUB/CNY:

Bank of Russia: No Need to Increase Yuan-Ruble Swap Volume

Harry Hindsight

• EUR: A quiet day overall, with the market hedging up from the opening 1.1120 levels, early trading tested the opening levels before the market moved above 1.1130 and traded quietly through the Asian session, eventually testing to the 1.1140 levels into late trading before correcting in the grey hours, the move into the London session saw a little buying move in and the market pushed to the 1.1160 levels before drifting towards the NYK session in anticipation of the NFP. Initially the market moved quickly higher to above the 1.1190 one on the NFP number with a lower number seeing the USD drop quickly however, the release of the unemployment numbers saw a quick reversal and the market dropping to 1.1090 as the rate dipped to 5.10% from the previous 5.30%, choppy markets continued before the market started to hold steady between the 1.1100-20 areas and lifting as end of week position cutting ensued and with the market running to a long weekend the market recovered at the end of London to the 1.1170 levels before drifting to a close around the 1.1150 areas.
• GBP: Cable slipped steadily through the Asian session moving from the opening just below 1.5260 levels as the EURGBP slowly moved off the 0.7290 levels to regain the levels from Thursday, Cable recovered a little into the London session from the lows on the opening below 1.5220 however, once that initial buying of Cable was over the market drifted again into the NYK session testing the 1.5220 levels again. The release of the US numbers saw the market rise quickly on the unemployment number to 1.5280 areas before again settling back to the original 1.5220 level and slowly drifting as the Cable was unable to match the steady gains in the Euro and slipped quietly through the 1.5200 level to test the 1.5170 area a couple of times into the close.
• JPY: USDJPY traded steadily lower as the safe haven flows continued through the Asian session and even the NFP had little impact considering, moving from the opening 120.10 levels and tracked the Nikkei for the most part steadily to the 119.10 levels before finding sufficient support, the move into the London saw a limited rise into the opening before the market again dropped off quickly again to test the 119.00 levels and touch through the 118.90 levels as Tokyo re-entered the market for the final time. The move towards the NYK session was a limited rise to the 119.20 areas, the release of NFP saw the market spike to the 119.y60 levels and then drop to the 118.60 levels so a less volatile move than some and the market the returned to the median holding the 119.10 levels and rising to the 119. 40 level before drifting to the close around the 119.00 levels.
• AUD: The Oz slowly lost ground through the session with the market dipping through the 70 cent level early into the Tokyo session from the opening dipping to the 0.6960-70 areas for a good portion of the session as before moving to the 0.6980-90 levels into the London session and holding those levels until the NFP numbers were released, as with the other markets the Oz spiked first before dropping back from the 0.7010 levels to trade to the 0.6930 levels, the market then stalled until the market started to run to the London close and further selling appeared as the bottom picker started to cut out there weak longs and the market dropped to the 0.6910 level and tested the level several times to the close.

Friday’s premiership results

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%

EUR        German Factory Orders M/M Jul A -1.40% | C -0.60% | P 2.00% | R 1.80%

EUR        German Factory Orders n.s.a. Y/Y Jul A -0.60% | C 0.30% | P 7.20% | R 7.00%

CHF        CPI M/M Aug A -0.20% | C -0.20% | P -0.60%

CHF        CPI Y/Y Aug A -1.40% | C -1.40% | P -1.30%

EUR        Eurozone Retail PMI Aug A 51.4 | P 54.2

USD       Change in Non-farm Payrolls Aug A 173K | C 220K | P 215K | R 245K

USD       Unemployment Rate Aug A 5.10% | C 5.20% | P 5.30%

USD       Average Hourly Earnings M/M Aug A 0.30% | C 0.20% | P 0.20%

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

CAD       Unemployment Rate Aug A 7.00% | C 6.80% | P 6.80%

CAD       Ivey PMI Aug A 58 | C 53.5 | P 52.9

Stay lucky

Andy

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