Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.135 | EURUSD 1.11271 | AUDUSD 0.70895 | NZDUSD 0.6296 | USDCAD 1.32707 | USDCHF 0.97496 | GBPUSD 1.53663 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.33 | 119.645

EUR/USD             1.1141 | 1.1105

EUR/JPY               133.685 | 133.20

AUD/USD            0.7088 | 0.7019

NZD/USD             0.6301 | 0.6256

USD/CAD             1.3295 | 1.3267

EUR/CHF              1.0854 | 1.0845

USD/CHF             0.9765 | 0.9738

GBP/USD             1.5364 | 1.5338

EUR/GBP             0.7258 | 0.7237

For Today

• EUR: Euro’s started the day holding around the 1.1130 levels into the last of the Tokyo bank holidays, the move into the Tokyo period saw the Euro testing lower as the market tested the resolve to the downside before the release of the CNY numbers was released that is, then the market reversed as EURAUD buying moved into the market after the number and the Euro steadily made its way to the 1.1140 levels and into the grey hours towards those highs. Topside offers light through to the 1.1160 level then likely to be a little weak until closer to the 1.1200 areas and stronger offers likely, a push through the 1.1220 areas is likely to open up to weak stops and the market then has a little freedom to the topside with light offers again dominating through the 1.1250 areas. Downside bids into the 1.1100 areas likely to continue through to 1.1070 before stops are likely to appear and then the market is open to the 1.1020-00 areas.
• GBP: Cable remained adrift at the bottom of yesterday’s fall, with the market opening around the 1.5360 areas and drifting steadily to rest in the 1.5340 areas in slow trading for the GBP, topside offers light through the 1.5380 areas with the market then opening to 1.5440 with little to stand in the way of progress higher, beyond that 1.5500 is likely to remain fairly resistant and will slow down any move higher probably. Downside bids in the current areas however, a strong push through the 1.5440 area is likely to see light stops and a quick test to the 1.5300 and possibly stronger bids before the market opens for a longer term test to the years lows below 1.5200.
• JPY: Although the bank holidays continue in Japan the market was a little more active over all opening around the 120.15 areas the market initially tested lower through the Sydney hours then started to see strong movement higher triggering a few weak stops from early sellers as the market moved through the 120.20 areas before finding light resistance sufficient to hold the market in the 120.30 areas, the release of the PMI manufacturing number at lower than expected sent the market scrambling for a safe haven and the USDJPY quickly dipped back from the highs and again to test the 119.70 areas before holding quietly through the session to the grey hours close to those lows. Topside offers through the 120.20 levels and then likely to open a little on a move through 120.30 before running into further light offers building in size from the 120.50 level through to 121.20. Downside bids seem to be fairly strong around the current 119.70 levels however, this is the second day that the market has tested down to the level and the bids are likely to be a lot lighter and then the market opens to the 119.20 areas and another round of solid bids that will probably need to be chipped away at. Only a clear break through the 118.70 is likely to open the downside appreciably and without Japan its less likely.
• AUD: The Oz was reasonably quiet until the release of the CNY PMI number and having held around the 0.7080 areas after the opening around 0.7090 quickly dropped away to trade into the 0.7030 levels quickly and then probing to 0.7020 as the market adjusted to the bad number, with some light congestion from here into the 0.7000 levels the market is likely to struggle for the moment however, a breakthrough of that level will likely have a mixed reaction with light stops mixed with fresh buyers attempting to pick the bottom, and hardly ever a decisive move, with technical types looking from then on for the breakout trade on any attempt at the lows around the 0.6920 areas, likely option plays may dominate at this point. Topside offer light to the 71 cent level and the market is possibly better offered from the 0.7150 areas onwards with 72 cent possibly back as being the strong area however, a push through the level opens fresh tests to the 0.7270-0.7300 areas.

Overnight News

CNY:

China Won’t Devalue Yuan to Boost Exports, Xi Says

China to Maintain Medium to High Growth Rate, Xi Says

Caixin China Sept. Flash Manufacturing PMI 47; Est. 47.5

CNY/USD:

Xi Welcomes U.S. to Join Asian Infrastructure Investment Bank

Xi Says China Ready to Set Up Cybercrime Mechanism With U.S.

USD:

Fed’s Lockhart Says He Feels ‘Very Close’ to Rate Lift off

Lew Says Economic Gains Should Be ‘Spread More Fairly’: CBS

TWD/CNY:

Taiwan FX Reserves’ Yuan Position Has Posted Gains So Far: Perng

NZD:

New Zealand Housing Loan Approvals Rise Most Since March 2013

Today’s data

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

AUD       Conference Board Leading Index Jul A 0.30% | P -0.20% | R -0.30%

CNY        Caixin China PMI Manufacturing Sep (P) A 47 | C 47.8 | P 47.3

07:00     EUR        France Manufacturing PMI Sep (P) C 49.2 | P 48.3

07:00     EUR        France Services PMI Sep (P) C 50.9 | P 50.6

07:30     EUR        Germany Manufacturing PMI Sep (P) C 52.8 | P 53.3

07:30     EUR        Germany Services PMI Sep (P) C 54.5 | P 54.9

08:00     EUR        Eurozone Manufacturing PMI Sep (P) C 52.2 | P 52.3

08:00     EUR        Eurozone Services PMI Sep (P) C 54.1 | P 54.4

12:30     CAD       Retail Sales M/M Jul P 0.60%

12:30     CAD       Retail Sales Less Autos M/M Jul P 0.80%

14:30    USD       Crude Oil Inventories P -2.1M

Harry Hindsight              

• EUR: With Japan into day two of the three bank holidays the market struggled through the Asian session moving from the opening 1.1190 levels to push above the 1.1200 levels before moving into the grey hours and light selling triggering weak stops on the break through the 1.1180 levels and falling to the 1.1150’s before the official opening in London, the market saw a mild bounce and the buying increased on the UK PBSR and again the market tested above the 1.1200 levels with very little conviction, from that high though the market drifted ever lower through the day with the market pushing to the 1.1120 levels and holding that level through NYK and to a quiet close.
• GBP: The move through the Asian session saw the market opening around the 1.5510 levels and testing towards the 1.5530 in slow trading, the move into the grey hours saw steady selling to push through the 1.5500 areas however, the move into London saw stronger selling on the release of the PSBR number showing an increase in the borrowing requirement and although the market was not overly affected at the time continued to drift lower from that point struggling through the 1.5480-40 areas and into the NYK session where stronger selling increased with a combination of USD buyers and those reading more into the single blot on this year’s borrowing requirement than is possibly there however, the selling increased and the 1.5400 level saw token bids and light stops opening a move to the 1.5350 levels before the market stabilized to close just above the 1.5360 areas. EURGBP cross recovered from early European selling and the market moved up to the 0.7240 areas once the UK data was out of the way and then made more movement into the NYK session to test above the 0.7250 levels with limited interest in the pair.
• JPY: USDJPY moved quietly through the Asian session with Japan for the most part closed, the market drifted from the opening 120.60 areas down into the 120.30 levels on light volumes to push back into the grey hours to test above 120.50, with real interest curbed for the day the market saw London quickly selling USDJPY into the London session and the selling continued with cross JPY selling spilling over into the USDJPY and a push through the 120.00 level was absorbed for several hours with the market moving into the NYK session attempting to break down through the 119.70 levels before reversing quickly on the failure to then trade in a wide range around the 120.00 level and eventually closing above the 120.10 areas.
• AUD: Quiet trading through the Asian session opening around the 0.7130 areas and testing towards the 0.7150 areas before slipping back to the opening areas into the grey hours, limited buying in the grey hours saw the market again testing higher and pushing into the London opening testing the 0.7160 levels however, that was the last time we saw the level and the rest of the session saw AUDJPY selling move into the market as JPY strengthened, this took the Oz through to mid-NYK testing to the 0.7060 levels before finding sufficient bids to hold the market and the market slowly rose to the closing areas.

Yesterday’s premiership results

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

AUD       House Price Index Q/Q Q2 A 4.70% | C 2.50% | P 1.60%

CNY        Conference Board Leading Index Aug A 1.00% | P 0.90%

CHF        Trade Balance (CHF) Aug A 2.87B | C 2.97B | P 3.74B | R 3.58B

GBP       Public Sector Net Borrowing (GBP) Aug A 11.3B | C 8.7B | P -2.1B | R -0.1B

GBP       CBI Trends Total Orders Sep A -7 | C 0 | P -1

USD       House Price Index M/M Jul A 0.60% | C 0.40% | P 0.20%

EUR       Eurozone Consumer Confidence Sep (A) A -7 | C -7 | P -6.9

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.