Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 119.971 119.80-90 | EURUSD 1.12995 1.1285-95 | AUDUSD 0.71879 0.7185-95 | NZDUSD 0.6403 0.6400-05 | USDCAD 1.32233 1.3220-30 | USDCHF 0.96863 0.9645-55 | GBPUSD 1.55289 1.5520-30 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.27 | 119.7

EUR/USD             1.1322 | 1.1266

EUR/JPY               135.61 | 135.10

AUD/USD            0.7197 | 0.7162

NZD/USD             0.6401 | 0.6352

USD/CAD             1.3236 | 1.3182

EUR/CHF              1.09555 | 1.0930

USD/CHF             0.9703 | 0.9638

GBP/USD             1.5543 | 1.5515

EUR/GBP             0.7285 | 0.7262

For today

• EUR: Euro’s opened a little lower in the pre-market period testing to the 1.1260’s before steadily recovering and the official open was a little lower around the 1.1285 areas and heading into the Tokyo session holding its levels, Tokyo were slow sellers of USD’s as the market finally settles down after the FOMC with the market again starting to look for the lift off in USD rates, Greece’s vote seems to be running to a victory for Tsipras with defections only limiting his possible majority. Euro’s started to move higher through the session and the market pushed through the 1.1300 areas and continued steadily to test the 1.1320 areas and holds into the grey hours. Topside offers light through the 1.1320 areas and likely to open to the 1.1360 level with light offers then continuing to the 1.1400 area and possibly a little stronger however, better offers are not likely until the market once again tests to the 1.1460 levels with those offers likely to strengthen into 1.1500. Downside bids light to the 1.1220 areas and then likely to increase as the market tests through the 1.1200 levels with the possibility of bids continuing through the next big figure.
• GBP: Cable opened around the closing levels on Friday and the market initially tested below the 1.5520 areas into early Tokyo before rising steadily more of a consequence of Euro buying than anything else however it tested to the 1.5545 areas and spent much of the session holding around the 1.5540 levels into the grey hours. Topside offers light through the 1.5550 areas and the weakness continues with nothing really special likely until the market tests to the 1.5650 areas and stronger offers from there and into 1.5700 before stops are likely to appear. Downside bids into the 1.5500 areas with the possibility of weak stops through the area and the market opening to stronger ranges into the 1.5400-50 areas.
• JPY: USDJPY opened a little higher on the official opening around the 120.15 areas before drifting back to test into the Tokyo session around the 120.00 levels, the market moved lower again however, with Tokyo out for the next few days the 119.80-70 areas for the moment seems to have limited bids holding the area and the market looks for direction in a market that seems devoid of ideas and players, commentary from several Fed officials over the weekend did weaken the USD somewhat however, it was mixed at best and not exactly in line with the dovish nature of Yellen’s commentary. Topside offers through the 120.40 areas are likely to be light and not until the market tests above the 120.80 is there likely to be meaningful offers however, a push through the 121.30 areas may see the market open with light offers continuing to the 121.60 areas and then a free run possible to test the 122.00 and the possibility of stops opening the topside. Downside bids light until the market reaches towards the 119.20 areas then stronger bids through the level and into the 118.80 areas and even through these levels the market is likely to need plenty of impetus to test through 118.50 and into a possibly stronger 118.20 areas.
• AUD: A couple of days of actions for the Oz and still the market holds similar levels after all that with the market testing to the 0.7280 from the FOMC onwards however, the Oz opened in line with the close on Friday and held the 0.7190 areas for several hours through early trading and into the Tokyo session, a lack of movement higher and little newsworthy items saw the Oz steadily drawn back to the 0.7170 areas through Tokyo and holding that area into the grey hours. Topside offers have been thinned out through the 72 cent levels however; better offers are not likely until the market tests through the 0.7280 areas and likely very little room if the market continues pushing through the levels with plenty of congestion likely from 73 cent onwards with stops likely to be light only. Downside bids light through the 0.7150 areas and the market likely to see stronger bids into the 71 cent level before the market opens to stops through the level and bids only likely to start reappearing on a move to the 0.7050 areas.

Overnight News

JPY:

Abe Public Support Falls 6 Points to 40%, Nikkei Says

Abe’s Approval Rises to 35%, Disapproval to 50%, Mainichi Says

CNY:

PBOC Deputy Governor Says China Economy Is Stable: Fin. News

China Renews Push for Market Economy Status: FT

GBP:

U.K. September House Prices Rise 0.9% M/m, Rightmove Says

GBP/CNY:

U.K. Welcomes Chinese Investment in Nuclear Projects: Osborne

EUR:

Dijsselbloem Looks Forward to Swift Formation of New Greek Govt

German August Tax Revenue Rises 6.9% Y/Y, Finance Ministry Says

NZD:

Key Says Record Immigration a Vote of Confidence in N.Z.

New Zealand Annual Immigration Rises to Record 60,290

N.Z. Consumer Confidence Fell to Three-Year Low in 3Q: Westpac

Today’s data

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

NZD       Westpac Consumer Confidence Q3 A 106 | P 113

GBP       Rightmove House Prices M/M Y Sep A 0.90% | P -0.80%

06:00     EUR        German PPI M/M Aug C -0.30% | P 0.00%

06:00     EUR        German PPI Y/Y Aug C -1.50% | P -1.30%

12:30     CAD       Wholesale Sales M/M Jul C 0.30% | P 1.30%

14:00     USD       Existing Home Sales Aug C 5.50M | P 5.59M

Weekend News

USD:

Bullard Says He Argued Against Fed’s Call to Leave Rates on Hold
Bullard Says Fed ‘Ready to Go’ on Rates in Oct. if Warranted
St. Louis Fed’s Bullard Says He Argued Against Fed Rate Hold
Williams Says Not Appropriate for Fed to Signal Plan Pre-Meeting
Fed Is ‘Not Out of Ammunition,’ SF Fed’s Williams Says
Fed Dissenter Lacker Says U.S. Economy Needs Higher Rates Now
USD/EUR:

ECB’s QE Has Been a Driver behind Dollar Move: Fed’s Bullard

USD/CNY:

U.S. Wants to See China Reform Commitment in Xi Visit: Official
Obama, China’s Xi to Hold News Conference Sept. 25: White House
CNY:

CSRC to Base Penalties on Severity of Illegal China Stake Sales
China Should Step Up Property Protection of Private Cos.: NDRC
China-led AIIB Sees 6-10% Returns on Projects as ’Reasonable’
USD/MYR:

FBI Said to Open Probe of Malaysia’s 1MDB Fund: WSJ
EUR:

Greeks Head to Polls to Decide Who Will Implement Bailout Deal
France’s Ratings Cut to Aa2 from Aa1 by Moody’s
JPY:

Japan Expected to Maintain Economic Outlook Next Week: Nikkei
JPY: Japan Passes Bills to Allow Troops to Fight in Overseas Wars
KRW/JPY:

1. Korea Urges Stability, Transparency in Japan’s Defence Policy
   CNY/JPY:

China Urges Japan to Act Prudently on Military, Security Issues
JPY/RUB:

Japan Foreign Minister to Visit Russia to Discuss Trade, Ukraine
EUR/INR:

EU Hits India with Tariffs Up to 31.2% on Water, Sewage Pipes
GBP:

Labour London Mayor Candidate Khan Opposes More Taxes: FT
PHP/CNY:

Philippines, China Territory Issues ’Very Difficult’: Purisima

Harry Hindsight

• EUR: Euro’s drifted lower through the Asian session moving from the opening 1.1420 levels to trade around the 1.1400 areas, the move into the London session saw the market heading higher to test the resolve to the topside with light buying from real money and leveraged types pushing gradually to the 1.1460 levels and stronger offers, the lack of a follow through saw the market then drifting for the rest of the day, with the market heading into NYK testing the opening levels, a dip through the 1.1400 areas and weak stops through the area dropped the market smartly to the 1.1380 levels and although there appeared some support the reversal of the previous day was open and the market eventually pushed to the 1.1360 levels, once this level broke the market quickly sold to the 1.1300 levels with weak stops pushing quickly through the light bids into the 1.1300 areas and the market eventually testing briefly below the 1.1280 levels on light volumes before closing close to the 1.1300.
• GBP: As with the Euro the Cable drifted from the opening 1.5590 levels and held through the Asian session around the 1.5560-80 levels through into the grey hours before the market in London got underway, rising to the 1.5600 level the market tested the topside in the grey hours but found little impetus to push through until the official opening and the move from then was more gradual but pushed through easily enough and rallied in the early part of the session pushing to the 1.5660 area before drifting through the session holding the 1.5630-50 areas into NYK. As with the Euro though the USD saw strong buying as the market in NYK quickly started to reverse the previous action from the FOMC release and USD buyers pushed the Cable steadily lower with weak stops through the 1.5600 levels and holding the 1.5570-80 areas as EURGBP sellers moved into the market balancing the market for a short period before again slipping lower and steadily testing to the 1.5520 levels with the EURGBP cross trading to the 0.7270 levels.
• JPY: The USDJPY found a nervous market moving into the weekend and although the market initially tested the 120.20 levels it steadily moved lower and traded though the 120.00 levels into tested into the 119.70 areas before commentary from RBA’s Stevens triggered a quick and savage move to test the 120.40 before collapsing back lower and back to the 120.00. The move into the London session saw the early players selling USD’s and the move into the mid-morning period saw the USDJPY trading on the supportive 119.00-20 areas with Euro’s and Cable riding high, the move to the NYK session saw strong USD buyers and pushing the market steadily higher through the early part of the session to the 120.00 levels and although the market moved in the Euro’s and Cable the USDJPY held fairly steady to the close.
• AUD: The Oz rose only steadily through the early session and although the market saw some strong and quick AUDJPY cross buying the pressure was more in the USDJPY leg than the Oz which moved from the 0.7170 levels to hold above 0.7190 levels into the grey hours, early London buying set the market on a stronger rise and the movement through the 0.7220 saw light stops and the continuation of the rally to push to the 0.7280 levels for the second time in 24hrs and although RBA Stevens comments were not that different to many other comments the market took some of the comments possibly a little out of context and once the market moved into the NYK session the USD buyers appeared triggering swift cutting of long positions from the day traders and the market quickly against the 0.7220 level before weak stops through the level and again through 0.7210 areas triggering the market to the 0.7190 areas into the close and only a small gain on the day.

Friday’s premiership results

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

EUR        Eurozone Current Account (EUR) Jul A 22.6B | C 21.3B | P 25.4B | R 24.9B

CAD       CPI M/M Aug A 0.00% | C 0.00% | P 0.10%

CAD       CPI Y/Y Aug A 1.30% | C 1.30% | P 1.30%

CAD       BoC CPI Core M/M Aug A 0.20% | C 0.20% | P 0.00%

CAD       BoC CPI Core Y/Y Aug A 2.10% | C 2.10% | P 2.40%

USD       Leading Indicators Aug A 0.10% | C 0.30% | P -0.20%

Stay lucky

Andy

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