Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 120.595 120.41-70 | EURUSD 1.13367 1.1330-45 | AUDUSD 0.70907 0.7078-95 | NZDUSD 0.63158 0.6298-0.6331 | USDCAD 1.32637 1.3238-75 | USDCHF 0.9692 0.9681-0.9713 | GBPUSD 1.54287 1.5405-50 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.85 | 120.27

EUR/USD             1.13595 | 1.13285

EUR/JPY               137.05 | 136.50

AUD/USD            0.7136 | 0.7076

NZD/USD             0.6345 | 0.6279

USD/CAD             1.3257 | 1.3226

EUR/CHF              1.10045 | 1.0987

USD/CHF             0.9703 | 0.9679

GBP/USD             1.5460 | 1.5427

EUR/GBP             0.7355 | 0.7340

For today

• EUR: Opening in line with Friday’s close the market slowly moved towards the Tokyo session catching early risers buying quickly all the cross JPY, this helped the Euro up to test the 1.1360 levels before drifting back again as the market moved into the Tokyo session fully. The market continues to struggle just above the 1.1300 levels with offers likely to extend through the 1.1310 areas however, the possibility of weak stops through 1.1320 is likely to open the market for a larger move if momentum can be found with light offers around the 1.1450-60 areas and then getting stronger only towards the 1.1500 levels. Downside bids into the 1.1250 levels open to the downside on a move through 1.1240 however, one would suspect respectable bids from the 1.1220 levels for the moment and likely to continue through the 1.1200 areas with light bids down to 1.1150 where the market is likely to be a little stronger, nothing really of note on
• GBP: Cable opened around the 1.5430 levels and spent the first few hours pushing towards the 1.5460 levels and the highs from Friday before slowly drifting off having spent a short period attempting to break the level, the market then settled quietly into the 1.5445 levels with little movement in the market. Topside offers light into the 1.5460 levels and likely to continue in the same vein until stronger offers around the 1.5500 area, a break above the level opens a test to the 1.5600 levels and possibly weak offers but increasing on a move towards 1.5650. Downside sees light bids into the 1.5400 levels and the bids are likely to continue through to the 1.5350 and slightly stronger level before giving way to a test to the 1.5300 areas and weak stops below.
• JPY: The move through the pre-Tokyo session was reasonably quiet with the market opening around the 120.55 areas and moving as low as 120.50 and just above the 120.60 levels before Tokyo opened with strong Cross/JPY buying moving into the market and USDJPY running to above the 120.80 in the first hour and fixing demand adding to the movement however, from that point onwards it has been steady buying of JPY and the USDJPY has since drifted steadily lower through the session to drop to 120.30 and holding in that area as the market heads towards the grey hours. Downside bids into the 120.00 level are likely to continue on a move through to the 119.80 areas with likely stops through 119.70 before running into light bids to begin with increasing in size the closer you get to the 119.00 levels and strong bids down to 118.80, Light topside offers around the 120.80 levels then see’s likely stronger levels building above 121.00 and towards 121.30, even through this level the chances of offers likely increasing into the 121.80-122.00 before the market is likely to open.
• AUD: Opening almost unchanged the market moved into the Tokyo session and saw strong buying of the AUDJPY carry trade move in and the Oz quickly moved through the 0.7090 levels and pushed into the mid 0.7130’s before drifting back to 0.7120 and then dropping back just as quickly as the rise as USDJPY selling limited those gains and caused the fresh longs to close out again, the Oz traded downing through the 0.7080 as weak stops were triggered before finding sufficient support in the market to hold the opening levels as the market moves to the grey hours around the 0.7090 levels. Light offers into the 0.7150 areas are likely to give way to weak stops through the 0.7170 levels however, better offers will quickly appear slowing the market into the 72 cent level and possibility of those offers increasing around the arear before the market opens to a test to the 0.7250 areas and further light offers. Downside bids are likely to be light and 0.7050 is possibly the better bid area and into the 70 cents however, below the 0.6950 levels the market is likely to find stronger bids waiting with any push through the 69 cent level opening the market to further downside potential however, one would suspect goods bids continuing from the 0.6920 areas onwards.

Overnight News

EM:

Emerging Markets More Exposed Since ’08 to U.S. Rate Rise: Fitch

JPY:

Japan Cabinet Approval Falls to New Low of 36% in Asahi Poll

Alert Level Raised for Japan’s Mt. Aso after Eruption

JPY/USD:

Okinawa Governor to Cancel Landfill Approval for U.S. Base: Asahi

CNY:

China’s new lending to Rise in Next Few Months: Sec. Journal

China SOE Reform Must Improve State-Owned Capital Efficiency

PBOC Should Use Monetary Policy to Stabilize Growth: Academic

NZD:

New Zealand’s Key Says RBNZ Has Upbeat View of Economy

Statistics NZ Revises 2Q Retail Sales Volumes to Unchanged

New Zealand Services Industry Expanded at Faster Pace in August

N.Z. Economists Lower 2015-16 GDP Growth Forecasts, NZIER Says

Today’s data

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

04:30     JPY         Tertiary Industry Index M/M Jul A | P 0.30%

07:15     CHF        Producer & Import Prices M/M Aug C -0.40% | P -0.30%

07:15     CHF        Producer & Import Prices Y/Y Aug P -6.40%

07:15     CHF        Retail Sales (Real) Y/Y Jul C 1.50% | P -0.90%

09:00     EUR        Eurozone Industrial Production M/M Jul C 0.30% | P -0.40%

Weekend News

CNY:

China Aug. Industrial Output Rises 6.1% Y/y; Est. 6.5%
China Jan.-Aug. Property Development Investment Rises 3.5%
CNY/HKD:

China Official Says Hong Kong Chief Above Judiciary, Legislature
GBP:

BOE’s Weale Says Rate Needs to Rise ’Relatively Soon’: Scotsman
EUR:

ECB Review of Greek Banks Under Way, Could Be Done End-October
ECB Sees Euro Governance as Not Fit for Purpose as Action Urged
Coeure: ECB Could Reinstate Greece Waiver on Program Compliance
Weidmann Says Euro-Area Economic Outlook Still Uncertain
Schaeuble Says Deposit Insurance Question of Proper Sequencing
Greek Finance Ministry Says Eurogroup Confirmed Positive Climate
GBP/EUR:

Osborne Called for Open EU Talks on Euro, U.K. Diplomat Says
SGD:

Lee Turns Focus on Singapore’s Young After Winning Election
HKD:

Hong Kong New Housing Supply Higher Than Expected, Chan Says
JPY:

Floods Leave 3 Dead, 23 Missing After Record Japan Rains
Japan Floods Wash Away 240 Bags of Fukushima Radioactive Waste

Harry Hindsight

• EUR: Euro’s had a reasonably quiet range through the day opening around the 1.1280 levels and attempting on a number of occasions to push through the 1.1300 levels only to drift back to the 1.1280 level after the openings in each time zone, the move into London saw the largest dip however, the move was steady and the market only made its way to the 1.1260 areas before beginning a steady rise to test the 1.1300 level gain before quietly moving through to the Michigan confidence number which was a big disappointment for the market and the Euro’s this time pushed through the 1.1300 with conviction and traded steadily to the 1.1340 levels and remained around the levels to the close.
• GBP: Cable drifted initially from the opening 1.5450 areas and moved into the Tokyo session basing on the 1.5440 level for much of the session, rising late in the session to test to the 1.5460 levels before moving into the grey hours and starting a steady decline which continued through London and into early NYK testing the 1.5410 levels before moving around a little between the low and 1.5440 before finally testing the 1.5400 level before the release of the Michigan number, a poor number helped the Cable rise back to the 1.5440 levels however, GBP was unable to keep pace with the Euro rise and Cable once again slipped back to trade around the 1.5430 levels to the close, EURGBP cross rose from the 0.7310 levels it had spent much of the session around and pushed above the 0.7350 before drifting a little into the close.
• JPY: USDJPY opened around the 120.60 levels and moved to the 120.80 into the Tokyo opening however, a better BSI Large manufacturing number helped to drive USDJPY a little lower before cross buying in the market materialized and the USDJPY quickly jumped with fixing demand driving the USDJPY to the 121.00 levels before slipping back to trade around the 120.80 levels into the grey hours, early sellers in Europe sold the market steadily lower to test the 120.40 levels and although the market did manage to test the 120.80 levels again into the NYK opening the day was curtailed with light volume though the day and ending the day around the opening levels.
• AUD: Opening around the 0.7070 levels the market ranged to the 0.7085 areas from the opening levels until slowly breaking down through the lows after several slow hours, the move into the grey hours saw the market only just below the opening levels and although the movement remained slow the opening in London saw the market pushing through the 0.7050 levels and stalling into the 0.7040 areas with short term profit taking then moving in from leveraged types and the market producing a steady grind higher eventually pushing through the 0.7090 once the release of the US confidence number had been released but never doing anything but nudging the high to finish around the level.

Friday’s premiership results

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

NZD       Business NZ Manufacturing Index Aug A 55 | P 53.5 | R 53.7

JPY         BSI Large Manufacturing Q3 A 11 | C -1.9 | P -6

EUR        German CPI M/M Aug (F) A 0.00% | C 0.00% | P 0.00%

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

USD       PPI M/M Aug A 0.00% | C -0.10% | P 0.20%

USD       PPI Y/Y Aug A -0.80% | C -0.90% | P -0.80%

USD       PPI Core M/M Aug A 0.30% | C 0.10% | P 0.30%

USD       PPI Core Y/Y Aug A 0.90% | C 0.70% | P 0.60%

USD       U. of Michigan Confidence Sep (P) A 85.7 | C 92 | P 91.9

Stay lucky

Andy

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