Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.223 | EURUSD 1.13168 | AUDUSD 0.7137 | NZDUSD 0.63314 | USDCAD 1.32628 | USDCHF 0.96848 | GBPUSD 1.5426 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.66 | 119.905

EUR/USD             1.1329 | 1.1300

EUR/JPY               136.39 | 135.84

AUD/USD            0.7166 | 0.7123

NZD/USD             0.6342 | 0.6312

USD/CAD             1.3265 | 1.3250

EUR/CHF              1.0957 | 1.0947

USD/CHF             0.96905 | 0.9671

GBP/USD             1.5433 | 1.5416

EUR/GBP             0.73395 | 0.73275

For Today

• EUR: Another quiet session with the market unable to move to far from the opening 1.1320 areas, testing initially towards the 1.1300 on light selling before moving back to the opening levels and continuing tor trade around the 1.1320. Decent run of numbers for the day and a possibility for each to break the Euro and indeed the market out of its range bound areas however, the market is more likely to sit waiting for the FOMC. Topside offers increasing in offers as the market approaches the 1.1400 levels with those offers all that’s in the way to a move back to the 1.1550 levels from last month, downside bids have moved up into the 1.1280 areas and are likely to continue into the 1.1250-40 levels before giving way to weak stops and then better bids through the 1.1200 levels into possibly a base area around the 1.1150.
• GBP: Cable moved quietly through the session with inflationary news later in the day denting any moves, opening around the 1.5425 areas the market moved around that level for the most part. Topside offers into the 1.5470 levels likely to continue to the 1.5500 areas before the market opens to the topside for a test into the ranges from last month with probably only light offers through to the 1.5600 areas. Downside bids below the 1.5400 levels are likely to extend to the 1.5350 areas and this is likely to be the short term key level for a test lower and through the 1.5300 areas continuing to the strong bids below 1.5200.
• JPY: The day opened with optimism it would seem with the market steadily rising from the opening 120.20 levels to test above the 120.60 area before running into light offers and the BoJ minutes with the retention of the 80T annual rise in the monetary base but leaving everything for the moment as it is and as expected generally in the market, The market dropped back quickly from the release and pushed quickly triggering weak stops through the 120.30-20 areas to push briefly through the 120.00 areas and into the supportive 119.90 levels and then finding a comfortable area just above the 120.00 areas into the grey hours. Topside offers into the 120.80-121.00 levels with the offers possibly continuing into the 121.20 areas before the market sees light stops and a possible push towards the 122.00 areas with good offers likely to appear above the 121.50’s. Downside bids into the 119.80 areas and although the market looks to be fairly strong the market is likely to see clusters of bids on a move lower with the 119.00-118.80 areas likely to be fairly strong. Numbers to watch will be the retail sales and IP numbers in the US and may be a bigger factor than the Euro and UK numbers. Kuroda to speak around 0630GMT.
• AUD: Strong buying again in the Carry trade took the market from the opening 0.7130 levels to above 0.7165 before running into offers and out of time for the RBA minutes with commentary on increased risk to global growth likely to increase risk to the Oz economy and consumer confidence dipping slightly had the market back under pressure and returning to the opening levels, the failure to move higher led the market into early grey hours selling and the market moving into negative territory. Light bids into the 0.7100 areas with a break below 0.7070 likely to open up a fresh dip to the months lows. Offers on the topside likely to get stronger towards the 0.7170 areas and onwards through the 72 cent levels a push through 0.7220-30 areas will open up limited movement and the offers are likely to return from 0.7250-60 areas.

Overnight News

JPY:

Bank of Japan Leaves Monetary Policy Unchanged as Forecast

Japan’s Amari Says There Has Been Progress on Auto Trade Talks

Japan’s Aso: Not Tied to Implementing Plan for Sales Tax Rebate

Radioactive Waste Bags Still Lost After Flood as Japan Searches

AUD:

RBA Says Intl Econ Developments Raised Risks to Global Outlook

Australian Political Change Comes at Challenging Time: Moody’s

Today’s data

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

08:30     GBP       CPI M/M Aug C 0.20% | P -0.20%

08:30     GBP       CPI Y/Y Aug C 0.00% | P 0.10%

08:30     GBP       Core CPI Y/Y Aug C 1.00% | P 1.20%

08:30     GBP       RPI M/M Aug C 0.30% | P -0.10%

08:30     GBP       RPI Y/Y Aug C 0.90% | P 1.00%

08:30     GBP       PPI Input M/M Aug C -2.20% | P -0.90%

08:30     GBP       PPI Input Y/Y Aug C -13.50% | P -12.40%

08:30     GBP       PPI Output M/M Aug C -0.20% | P -0.10%

08:30     GBP       PPI Output Y/Y Aug C -1.60% | P -1.60%

08:30     GBP       PPI Output Core M/M Aug C 0.00% | P 0.10%

08:30     GBP       PPI Output Core Y/Y Aug C 0.20% | P 0.30%

09:00     EUR        Eurozone Trade Balance (EUR) Jul C 21.4B | P 21.9B

09:00     EUR        Eurozone Employment Q/Q Q2 C 0.10% | P 0.10%

09:00     EUR        German ZEW (Economic Sentiment) Sep C 20 | P 25

09:00     EUR        German ZEW (Current Situation) Sep C 64 | P 65.7

09:00     EUR        Eurozone ZEW (Economic Sentiment) Sep C 42.1 | P 47.6

12:30     USD       Advance Retail Sales Aug C 0.40% | P 0.60%

12:30     USD       Retail Sales Less Autos Aug C 0.30% | P 0.40%

12:30     USD       Empire State Manufacturing Sep C 0.5 | P -14.92

13:15     USD       Industrial Production Aug C -0.20% | P 0.60%

13:15    USD       Capacity Utilization Aug C 77.70% | P 78.00%

Harry Hindsight              

• EUR: A quiet session with early gains through cross/JPY buying soon disappeared on the move into the Tokyo session although the market didn’t test those opening 1.1330 levels until the grey hours and the market held for the most part in the 1.1340-50 areas, the move into the grey hours saw the market run to its highs for the day and push through the 1.1370 levels before dropping back on the official opening in London saw the market back to the 1.1340 levels and slowly slipping lower, the market traded in steps lower pushing into the 1.1300 areas and ignoring a decent IP number, early NYK were light buyers before the market tested through the 1.1300 levels properly and testing into the 1.1280 levels however, although the volumes were light there was sufficient to push it away from the support areas and the market then traded in the 1.1310-20 to the close.
• GBP: Cable gained during the Asian session pushing from the opening 1.5430 levels and pushing towards the 1.5460 levels into the Tokyo session, before drifting from those highs over the balance of the session back towards the opening levels, grey hour buying saw the market rising again as the market tested the topside before the official opening in London took the opportunity to sell the market and took the market away from the highs, the market held in the 1.5450-60 areas but was unable to push any further and then slowly drifted as EURGBP selling initially limited the USD buying in the market however, once the market pushed through the opening levels the weak stops accelerated the selling and the market hit 1.5420 and continued slowly to test the 1.5400 into the NYK session, the market held for a period around the 1.5390 levels and made one stab lower through the 1.5380 areas but as with the top the opposing orders soaked the pressure and the market bounced when it was unable to break lower and moved back to the opening areas and closed only just short of that level.
• JPY: Another range bound day but with a deeper move, early buying of Cross/JPY in particular the AUDJPY saw the market rise in early trading from the opening around the 120.60 levels to test above the 120.80 areas before steadily being sold back again trading to the 120.30 in light trading before finding only light bids into the grey hours, the grey hours failed to see the market move beyond the 120.50 levels and the limited bounce gave the market more indication to sell the market and although the market moved to the 120.10 areas on the first move the London session steadily recovered that loss. However, the NYK session were keen to test lower and the market again tested lower pushing through the 119.90 levels and into stronger bids before running out of stops and slowly rising to close above the 120.20 areas.
• AUD: Early Carry trade buying helped the market move to above the 0.7130 levels from the opening around the 0.7090 areas before the market reversed with news that Australia is attempting to break the Italian record for greatest number of PM’s however, that will be a tough one to break but with 5 in 5yrs they giving it a good try. The market triggered weak stops on the move through the 0.7080 levels on the way down and into the grey hours only for early London quickly buying the market from the sub 0.7070 areas and pushing back to the highs as the market absorbed the news and one assumes approves of the change of leadership and the market settled into a 0.7120-30 areas for several hours before the NYK market pushed a little further and tested the 0.7150 areas and a quiet drift to the close.

Yesterday’s premiership results

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

JPY         Tertiary Industry Index M/M Jul A 0.20% | C 0.20% | P 0.30%

CHF        Producer & Import Prices M/M Aug A -0.70% | C -0.40% | P -0.30%

CHF        Producer & Import Prices Y/Y Aug A -6.80% | P -6.40%

CHF        Retail Sales (Real) Y/Y Jul A -0.10% | C 1.50% | P -0.90%

EUR       Eurozone Industrial Production M/M Jul A 0.60% | C 0.30% | P -0.40% | R -0.30%

Good Luck,

Andy

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