Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.815 | EURUSD 1.12029 | AUDUSD 0.70176 | NZDUSD 0.63436 | USDCAD 1.32096 | USDCHF 0.97904 | GBPUSD 1.53972 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.45 | 119.82

EUR/USD             1.1217 | 1.11615

EUR/JPY               134.74 | 134.26

AUD/USD            0.7071 | 0.7015

NZD/USD             0.6402 | 0.6339

USD/CAD             1.3214 | 1.3177

EUR/CHF              1.0970 | 1.0944

USD/CHF             0.9803 | 0.9776

GBP/USD             1.5404 | 1.5383

EUR/GBP             0.7283 | 0.7252

For Today

• EUR: Euro’s rose from the opening however, the topside offers proved resilient, and the Euro dipped as the USDJPY outstripped the Euro even though EURJPY was the main focus of the session, the market managed to trade around the 1.1215 areas before the Euro dipped into the Tokyo session dropping reasonably quickly to the 1.1190 levels and holding the area for several hours, as the EURJPY cross topped out the Euro spiked a little pushing through the 1.1200 level again before dropping back further a trading through the 1.1180 levels and drifted from that point pushing through the 1.1170 areas where the market holds as it heads into the grey hours. Topside offers remain through the 1.1220 areas with the market likely to see weak stops through the 1.1230 level and then further offers likely from then to the 1.1300 levels with those offs possibly continuing to the 1.1340 level before stops are likely to appear and a break through 1.1360 will open up a larger move higher with sentimental values such as 1.1400 providing only light resistance for the moment. Downside bids light into the 1.1150 levels and better bids appear from the 1.1100 areas and possibly extending to the 1.1020 areas with likely strong support.
• GBP: Cable spent the Asian session pushing against the 1.5400 levels with little in it before drifting lower in quiet trading for the pair and moves into the grey hours drifting a little lower towards the 1.5380 levels. Topside offers remain in place with the likelihood of stops appearing above the 1.5420 levels and offers quickly reappearing in front of the 1.5450 areas, a push through the 1.5450 level is likely to see light offerings into the 1.5500 level and the market then opening to possibly larger gains. Downside bids light through to the 1.5300 areas and even here the likelihood of anything meaningful is limited with the downside bids still building after this week’s move away from the 1.5200 areas which is likely to see the better bids down into the 1.5170 areas.
• JPY: From the opening 119.80 the day has been focused on JPY cross buying with AUDJPY carry fairly dominant, pushing into the Tokyo session the USDJPY was testing into the 120.00 levels and M2 numbers seemed to help the market with strong fixing demand and the market rapidly mad its way through the 120.30 levels and then stalled for several hours before pushing to above the 120.40 levels, the market then started to slip slowly back through the 120.30 levels and then hold the level into the grey hours. Strong cross JPY buying made up a good proportion of JPY selling through the session with the Carry trade moving from just above the 84.10 levels to test through 85.00 at one stage before running out of steam. Topside offers are likely to continue all the way through to the 121.00 areas with a possibility of light stops and then continuing offers particularly around the 121.20-40 areas before pushing for a break through the 121.80 levels and the topside opening for a return to the 124.00 areas. Downside bids into the 119.80 areas will likely see weak stops on a move through the 119.60 areas and then renewed bids from 119.40 and into the 119.00 levels; less support is likely from there until the market reaches possibly the strongest level around the 118.80 areas.
• AUD: Strong AUDJPY carry trade buying led to a stronger Oz in the face of the weaker Confidence number and Home loans, moving from the opening 0.7020 levels the market steadily rose through the early part of the session trading to the 0.7070 areas before finding sufficient resistance and the Tokyo market running out of steam, from there the market drifted back a little to trade into the 0.7050 levels and the grey hours. Topside offers around the 0.7070-80 areas is likely to see light stops and a quick attempt through the 71 cent level and further possible stops, from then on through the market is likely to be congested with possibly strong offers running to the 0.7140 levels before light resistance appears in the run to the 72 cent level and stronger offers. Downside bids light through the 70 cent level and bids are likely to start increasing on a move through to the 0.6960 areas with strong support remaining around the 0.6920-00 level.

Overnight News

JPY:

Important for BOJ to Keep Accommodative Environment: Shirai

Abe: Will Lower Corporate Tax in FY2016 By at Least 3.3% Pts

Japan’s Abe to Retain Aso, Amari, Suga in New Cabinet: Nikkei

Japan Post IPO Expected to Be Approved Sept. 10: Nikkei

AIIB:

AIIB’s Jin: Expect AIIB to Have More Than 70 Members Soon

CNY:

China Official Sees Acceleration in Growth Momentum: Daily

China Local Debt Rise Is Significant, But Manageable: Fitch

China Needs Circuit Breaker for A-Share Market: CASS Researcher

Former China SAFE Official Sees Forex Intervention Necessary

AUD:

RBA’s Lowe Says Non-Mining Investment Is ‘Missing Ingredient’

Australia’s April 2027 Auction Draws Lowest-Ever Coverage Ratio

Australia Sept. Consumer Sentiment Falls 5.6% M/m to 93.9

Australia July Home-Loan Approvals Rose 0.3% M/M; Est 0.8% Rise

GBP:

U.K. Aug. BRC Shop Price Index -1.4% Y/y vs July -1.4% Y/y

USD:

Krugman Says He Doesn’t Think Fed Will Move Next Week

Today’s data

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

GBP       BRC Shop Price Index Y/Y Aug A -1.40% | P -1.40%

JPY         Japan Money Stock M2+CD Y/Y Aug A 4.20% | C 4.10% | P 4.10% | R 4.00%

AUD       Westpac Consumer Confidence Sep A -5.60% | P 7.80%

AUD       Home Loans Jul A 0.30% | C 0.80% | P 4.40% | R 4.80%

JPY         Consumer Confidence Index Aug A 41.7 | C 40.6 | P 40.3

06:00     JPY         Machine Tool Orders Y/Y Aug (P) P 1.70%

08:30     GBP       Industrial Production M/M Jul C 0.10% | P -0.40%

08:30     GBP       Industrial Production Y/Y Jul P 1.50%

08:30     GBP       Manufacturing Production M/M Jul C 0.20% | P 0.20%

08:30     GBP       Manufacturing Production Y/Y Jul P 0.50%

08:30     GBP       Visible Trade Balance (GDP) Jul C -9.5B | P -9.2B

12:15     CAD       Housing Starts Aug C 194K | P 193.0K

12:30     CAD       Building Permits M/M Jul P 14.80%

14:00     CAD       BoC Rate Decision C 0.50% | P 0.50%

14:00     GBP       NIESR GDP Estimate Aug P 0.70%

Harry Hindsight              

• EUR: After a quiet start the CNY Trade balance numbers and the market was suddenly all about risk, moving from the opening 1.1170 levels the market dipped into the 1.1155 areas in early Tokyo trading and then held for a period around the mid 60’s before quickly rising on the CNY release and the push through the 1.1190 areas saw weak stops opening the topside move to the 1.1220 areas before hitting limited resistance all this helped along by a better than expected German trade balance this time, the market bounced around the area and extended to just below the 1.1230 levels before moving into the grey hours and strong London selling appeared to take it lower and into the 1.1180 levels for the official opening, after the Asian movements the market struggled for direction through the London session eventually testing below the 1.1160’s again before moving into the NYK session and slowly rising through the session initially to the 1.1190 areas and then as the session wore on trading back above the 1.1200 levels into the close with light buying.
• GBP: Cable started a steady rise through the Asian session moving from the opening 1.5280 areas and pushed steadily into the NYK session to the 1.5320 levels, early London were quick buyers and the market stalled initially around the 1.5350 levels before breaking to the 1.5380 levels before slipping slightly back into the official opening, before heading higher again with EURGBP tripping lower pushing back down through the 0.7300 levels and pushing towards the 0.7240 areas into the NYK system. Cable struggled through to push through the 1.5400 levels at this point and once it eventually pushed through on the NYK opening the market drifted back to the 1.5360 levels as light USD buying moved in, NYK equity markets moved quickly through the session and helped Cable to move higher pushing off the 1.5360 levels to test to the 1.5400 levels again into the close.
• JPY: The USDJPY slipped back having initially tested the 119.50 levels in early Tokyo dropping into the 118.90 levels on continued safe haven flows, the market eventually moved into the grey hours having pushed back above the 119.10 levels with early London quick buyers and the market was quickly higher and testing the 120.00 into the official opening and continued lightly to the 120.20 areas before stalling and finding some limited selling, the market then continued in the 119.90-120.20 areas to the NYK session before drifting a little lower on the move into the session dipping to the 119.70 levels and then ranging from 119.80-120.00 to the close.
• AUD: Moving off the 0.6930 levels the market moved steadily higher into the Tokyo session before the release of the CNY numbers and the market rallied quickly to the 0.6970 levels the market then trade quietly into the grey hours ranging around the 0.6950-60 levels before London started to buy steadily and into the 0.6980 levels, quiet trading through into the NYK session and then the market again started pushing through the 0.7020 areas failing the first time and then breaking to the 0.7040 areas before drifting to a close around the 0.7020 levels.

Yesterday’s premiership results

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

NZD       Manufacturing Activity Q2 A 0.40% | P -2.80% | R -2.60%

GBP       BRC Retail Sales Monitor Y/Y Aug A -1.00% | P 1.20%

JPY         Current Account (JPY) Jul A 1.32T | C 1.25T | P 1.30T

JPY         GDP Q/Q Q2 (F) A -0.30% | C -0.40% | P -0.40%

JPY         GDP Deflator Y/Y Q2 (F) A 1.50% | C 1.60% | P 1.60%

AUD       NAB Business Confidence Aug A 1 | P 4

CNY        Trade Balance Aug A $57.77B | C $51.10B | P $43.03B

JPY         Eco Watchers Survey: Current Aug A 49.3 | C 52.1 | P 51.6

CHF        Unemployment Rate Aug A 3.30% | C 3.30% | P 3.30%

EUR        German Trade Balance (EUR) Jul A 22.8B | C 21.8B | P 22.0B | R 22.1B

EUR        Eurozone GDP Q/Q Q2 (P) A 0.40% | C 0.30% | P 0.30%

Good Luck,

Andy

Any opinions, news, research, analyses, prices or other information contained on this Blog, whether by LMAX, its employees, partners or contributors, does not constitute investment advice nor has it been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the material contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Whilst information provided on this Blog may help with your investment research you must consider carefully whether you should make (or refrain from making) investment or other decisions based on what you see without doing further research on the investments you are interested in. Participating in this Blog cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you. LMAX has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the material produced in this Blog was obtained from sources deemed to be reliable, LMAX does not provide any guarantees about the reliability of such sources.

Consequently any person acting on it does so entirely at his or her own risk.

If you currently hold an account with LMAX for the purposes of trading FX and CFD’s, you are encouraged to use a different Username and Password to access the Blog or any other online systems. The Blog is a place to learn, discuss and share information and ideas with Blog followers. It is not a place to slander, use unacceptable language or to promote LMAX or any other FX, Spread Betting and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.