Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.013 | EURUSD 1.14352 | AUDUSD 0.71758 | NZDUSD 0.64343 | USDCAD 1.31806 | USDCHF 0.95986 | GBPUSD 1.55904 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.42 | 119.65

EUR/USD             1.1434 | 1.1390

EUR/JPY               137.30 | 136.55

AUD/USD            0.7196 | 0.7163

NZD/USD             0.6387 | 0.6347

USD/CAD             1.3183 | 1.3164

EUR/CHF              1.0982 | 1.09495

USD/CHF             0.9625 | 0.9599

GBP/USD             1.5589 | 1.5557

EUR/GBP             0.73345 | 0.7316

For Today

• EUR: Steady selling from the opening with the market opening just short of the 1.1440 level and moving into the Tokyo session around 1.1420, Tokyo sold quickly to take the market through the 1.1400 levels before the market saw the Euros start to recover to the 1.1420 levels and then a steady drift and a quiet market in the Euro to hold around the 1.1400 areas. Light bids into the 1.1380 levels with possibly weak stops just below the area and the market then opening a little to test into the 1.1320 areas with support likely to run to the 1.1280 levels, this is dependent on what the market perceives from this point on with the knee jerk reaction over with and nothing changing in reality as the market knew there would be very little chance of a hike, the dovish comments may have been a little bit of a surprise however, the unemployment numbers in the US are still likely to dominate the next move. Topside offers remain with offers likely to be lining up above the 1.1440 areas and into the 1.1460 level before a brief opening to 1.1480 and light offers around the level before stronger ones start to appear around the 1.1550 areas and onwards. Nothing special for the day and likely to be contained with minor jostling as positions are reset.
• GBP: Cable drifted from the opening to base on the 1.5560 levels and then to range from that level to the 1.5580 areas in what was for the most part a quiet session for Cable, topside offers remain around the 1.5600 areas with the offers likely to extend to the 1.5650 areas before the likelihood of stops appearing in what is a possible stronger areas of resistance however, for the moment EURGBP cross is likely to play more of a role in its movement for the day. Downside bids light to the 1.5500 levels and weak stops are likely through the area before the market opens for a test to the 1.5450 areas and further light bids.
• JPY: Now here is a nervous market moving into the weekend with the market opening around the 120.00 levels early buyers bought to the 120.20 areas before running out of steam, once there the market held into the Tokyo session pushing through 120.20 before dropping quickly as fixing supply impacted the market and the market dropped quickly to test the 119.80 levels and indeed push through 119.70 before finding sufficient strength to hold the market. Then came the Semi-annual testimony to the House standing committee on Economics, where RBA Governor Stevens presented and fairly steadfast front, and USDJPY found a lack of liquidity to the topside as reasonable AUD/JPY buying moved into the market and USDJPY suddenly shot from the lows to push above the 120.40 levels before dropping back again to below 120.00 and stabilizing around the 119.90-120.00 levels for a few hours before again slipping a little lower to the 119.80 and into the grey hours. Topside offers are likely to be a little thin until the market approaches the 121.00 areas where better offers are likely to be seen, weak stops on a move through 121.30 will see the market open quickly to the 121.80 areas. Downside bids are likely to be reasonably strong through the current lows and continue in that manner until the 119.00-118.80 areas then the possibility of stronger stops appearing through the 118.60-50 areas and the 118.00 levels becoming vulnerable to a test and deeper movement possible.
• AUD: The Oz again slowly edged higher from the opening with the market pretty much unchanged overall from yesterday and moving back to the 72 cent levels in steady buying with carry trade buying doing little to spark interest when the USDJPY moved on the RBA comments, the market has held above the 0.7190 levels for several hours and moves into the grey hours in that level. Topside offers are likely to again be in the areas above and around 72 cent however, they are likely to be a lot thinner than they were having been brushed aside yesterday, and stronger offers are likely to be seen closer to the 0.7280 areas and onwards. Downside bids light through the 0.7170 areas but likely getting stronger to the 0.7140 areas before a break lower exposes the 71 cent level.

Overnight News

AUD:

Stevens: Monetary Policy Seeking to Support Economic Transition

Stevens: Will Be Quite a Long Time Before U.S. Rates Are Normal

Stevens: RBA Content Where ‘We Are Right Now’ on Interest Rates

AUD/CNY:

Stevens Says China Continuing to Slow, Responding With Policy

AUD/JPY/EUR/USD:

Stevens Sees Low Rates in Japan, Europe, U.S. for Number of Yrs.

CNY:

China Aug. New Home Prices Rise M/m in 35 Cities; 31 in July

JPY:

Japan’s Amari Says Fed Decision ‘Appropriate’ in View of Economy

Japan’s Aso Says Not Going to Comment on Every Rating Action

New CPI Data Which Excludes Energy ’Useful’: Some BOJ Members

Japan FSA to Call on Megabanks to Strengthen Capital: Nikkei

Japan FSA Audit Board Says Toshiba Accounts ‘Fraudulent’: Nikkei

NZD:

N.Z. Job Advertisements Decline as Labor Demand Weakens: ANZ

Today’s data

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

08:00     EUR        Eurozone Current Account (EUR) Jul C 21.3B | P 25.4B

12:30     CAD       CPI M/M Aug P 0.10%

12:30     CAD       CPI Y/Y Aug P 1.30%

12:30     CAD       CPI Aug P 127.3

12:30     CAD       BoC CPI Core M/M Aug P 0.00%

12:30     CAD       BoC CPI Core Y/Y Aug P 2.40%

14:00    USD       Leading Indicators Aug C 0.30% | P -0.20%

Harry Hindsight              

• EUR: A quiet session moving through Asia and into London with minor gains to the 1.1320 areas after opening just above the 1.1280 levels, the move into the London session saw the market rise again to the 1.1340 areas before meandering for the next few hours around the 1.1320 levels dipping slowly to 1.1300 as the time for the Fed announcement, as was expected the rates were left unchanged however, the tone surprised the market a little and was fairly dovish and Euro’s moved quickly to the 1.1420 levels triggering some light stops along the way but generally all buying from across the spectrum, the market then held for a period into the late part of the session the market again ran a little higher as the early Antipodeans joined the market and took Euro’s to the 1.1440 level before the market close.
• GBP: Cable traded quietly through the session holding in the 1.5500-20 areas for the most part and moving a little higher to test the 1.5550 areas into the FOMC release and the market surged higher to move through the 1.5600 levels and to the 1.5620 before sufficient selling moved into the market to push it back lower again and finish the session just below the 1.5600 level. Concern about the world economy and in particular the situation in China seems to be the most likely issue.
• JPY: USDJPY opened quietly moving around the 120.60 levels before USD sellers moved in to take the market steadily lower and into the 120.30 areas before steadily recovering into the back half of the session moving through to the 120.90 areas and into the London session, not the best laid plans one now knows, the market continued trading in the 120.90-121.00 through the day until the FOMC result then it dropped back quickly moving from the 121.00 level to test the 120.30 in a quick move with plenty of two way flow before breaking again and slipping back to the 119.80 levels and closing just off the lows.
• AUD: The Oz opened just below the 0.7200 levels and moved through the session testing the level several times through the Asian session, the move into the London session saw the market drift away from the 72 cent level and slowly push down to the 0.7140 levels as Oz longs cut out positions into the FOMC, the release sent the Oz moving quickly higher trading from near the lows to hit above the 0.7270 levels in a quick move before returning in the same manner as AUDJPY selling kicked and the Oz quickly returned to the 0.7170 level and holding into the close.

Yesterday’s premiership results

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

NZD       GDP Q/Q Q2 A 0.40% | C 0.60% | P 0.20%

JPY         Trade Balance (JPY) Aug A -0.36T | C -0.35T | P -0.37T | R -0.38T

CHF        SNB 3-Month Libor Lower Target Range A -1.25% | C -1.25% | P -1.25%

CHF        SNB 3-Month Libor Upper Target Range A -0.25% | C -0.25% | P -0.25%

CHF        SNB Sight Deposit Interest Rate A -0.75% | C -0.75% | P -0.75%

GBP       Retail Sales M/M Aug A 0.20% | C 0.20% | P 0.10% | R 0.00%

USD       Current Account Balance Q2 A -110B | C -$110.0B | P -$113.3B | R -118B

USD       Housing Starts Aug A 1.13M | C 1.16M | P 1.21M | R 1.16M

USD       Building Permits Aug A 1.17M | C 1.15M | P 1.13M

USD       Initial Jobless Claims (SEP 12) A 264K | C 276K | P 275K

USD       Philly Fed Survey Sep A -6 | C 5.5 | P 8.3

USD       FOMC Rate Decision A 0.25% | C 0.25% | P 0.25%

Good Luck,

Andy

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