Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.053 | EURUSD 1.12326 | AUDUSD 0.70254 | NZDUSD 0.63641 | USDCAD 1.33041 | USDCHF 0.97535 | GBPUSD 1.52428 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.38 | 120.02

EUR/USD             1.1234 | 1.1160

EUR/JPY               134.92 | 134.15

AUD/USD            0.7023 | 0.6977

NZD/USD             0.6352 | 0.6301

USD/CAD             1.3352 | 1.3302

EUR/CHF              1.09395 | 1.0925

USD/CHF             0.9792 | 0.9755

GBP/USD             1.5240 | 1.5205

EUR/GBP             0.7362 | 0.7336

For Today

• EUR: Yellen’s speech was a little mixed however, the headline was again that she saw the lift off in 2015 and while there were some dovish comments the market took the strongest comment on board and the market opened with strong USD buying, with the Euro dropping quickly from the closing levels to the 1.1180 areas dipping to the 1.1160 before the Tokyo session moved in to recover to the 1.1180 levels and hold through to the grey hours. Topside offers weak to the 1.1220 levels with the stronger offers likely to the 1.1280-1.1320 areas now and yesterday’s highs. Even through the 1.1320 levels the offers are likely to continue in patches and only a break through the 1.1360 areas the 1.1400 is likely to provide further strong offers. Downside bids light through the 1.1180 areas and those light bids likely to continue into the 1.1100 areas before the chance of stops through the 1.1080 area appear, a push through the 1.1070 areas will likely see the market aiming for the 1.1000 areas and possibly stronger bids and limited option interest with congestion around that level likely to hold the market.
• GBP: Cable opened around the 1.5230 and not so deeper a gap as the Euro however the market did test to the 1.5210 areas before moving into the Tokyo session and was unable to fill the gap on the charts, EURGBP selling helped the Cable hold its position however, the move through the session gradually saw the market again dipping towards the lows. Topside offers likely weak into the 1.5300 areas with the market probably wide open for a move higher however, the market is missing some stronger numbers, light offers are likely to continue to the 1.5350 areas with the stronger numbers into the 1.5400 area, downside bids are strong into the 1.5200 levels and those bids are likely to continue towards the 1.5150 area however, while there is limited congestion through these levels the market is open to a move to the 1.5000 levels again.
• JPY: Opening around the 120.20 levels from a close nearer to 120.00 the market in USDIPY was unable to push too far from the opening and held in the early part of the session after the Yellen commentary around the 120.30 level before slipping back to trade just below the 120.20 level for the most part, topside offers light through to the 120.80 areas however, they maybe light but constant, once into the 121.00 area though the market is likely to see stronger offers going through to around the 121.40 areas before the market opens a little and 122.00 comes into view. Downside bids light through to the 119.20 areas where bids are stronger however, a push through the 118.70 areas will likely open up the possibility of a move to the 118.00 levels and a possible sharp stab lower with stops likely.
• AUD: Although the Oz opened below the 70 cent level after the Yellen comments the downside was short lived and the market saw AUDJPY buying bringing the Oz higher to fill the gap on the charts and to spend the early part of Tokyo trading around the 0.7020 levels before drifting a little in mid-session and holding above the 70 area. Downside bids still remain on any attempt to the 69 cent levels and although the negativity for Australia continues for the moment AUDJPY carry trade dominates the market and counters the strength of the USD however, a push through the 69 cent level is likely to trigger stops through 0.6890 and the market will have little to stop it moving quickly to the next big figure level. Topside offers through the 0.7020 area are likely to slow the market on a move higher into the 0.7060 areas before weak stops possibly make an appearance and the market will then slowly rise to the 71 cent levels

Overnight News

CNY:

China Shouldn’t Delay Financial Reform on Mkt Fluctuation: Sheng

PBOC’s Sheng Says China Interest Rate Reform Almost Done

PBOC Adviser Says Too Much Stimulus May Add Private Sector Cost

Former PBOC Official Calls for Opening Large Deposit Business

JPY:

BOJ’s Kuroda: Japan CPI Rising, If You Exclude Energy

Japan Aug. Core Consumer Prices Fall 0.1% Y/y; Est. -0.1%

Japan Recovering Moderately, With Slowness in Some Areas: Govt.

Japan’s Abe Cabinet Reshuffle May Remove Shimomura, Nikkei Says

Japan Minister Shimomura Offers Resignation to Abe: Kyodo

JPY: Japan to Ask Automakers to Report on Emissions Compliance: NHK

JPY/USD:

Japan Tobacco Said in Talks for $5 Billion Reynolds Assets

NZD:

N.Z.’s Groser Says TPP Currently Inadequate on Dairy: Fairfax

KRW/JPY:

1. Korea, Japan Foreign Ministers to Meet in New York Sept. 30

Today’s data

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

JPY         National CPI Core Y/Y Aug A -0.20% | C -0.10% | P 0.00%

JPY         Tokyo CPI Core Y/Y Sep A -0.20% | C -0.20% | P -0.10%

JPY         Corporate Service Price Y/Y Aug A 0.70% | C 0.50% | P 0.60%

08:00     EUR        Eurozone M3 Y/Y Aug C 5.40% | P 5.30%

12:30     USD       GDP (Annualized) Q2 (F) C 3.70% | P 3.70%

12:30     USD       GDP Price Index Q2 (F) C 2.10% | P 2.10%

14:00    USD       U. of Michigan Confidence Sep (F) C 87 | P 85.7

Harry Hindsight              

• EUR: A quiet Asian session saw the Euro holding around the 1.1180 levels with minor cross JPY selling dipping the Euro to the 1.1160’s before rising into the grey hours and pushing above the 1.1200 levels and into the London session pushing against the light offers into 1.1220, the market held the level into the NYK session and a little bit of buying was sufficient to push through the 1.1230 and trigger weak stops to the 1.1240 levels before continuing slowly to move higher, 1.1260 was a further point were the market triggered stops and the market pushed eventually towards the 1.1300 levels and more offers before reversing the move on the failure to break through, the market then drifted lower with anticipation of Yellen’s speech to come with the market drifting steadily back to the 1.1220 levels to finish just above the level.
• GBP: As with the rest of the market the Asian session Cable made very little headway moving quietly through most of the session to move from the 1.5245 areas and touch to the 1.5260 levels into the grey hours, London opened pushing above the 1.5280 areas being dragged along by the Euro more than anything with the EURGBP holding around the 0.7340 levels deep into London, buying in the Euro squeezed the Cable lower, as EURGBP climbed rapidly to trade briefly above the 0.7400 areas and forcing Cable to push towards the 1.5200 level into early NYK before bouncing back to the 1.5280 levels after the failure to push through and USD sellers helped as the London market closed. The market then drifted from those highs and slipped back to close in the 1.5240 areas and only slightly off the opening.
• JPY: Opening around the 120.30 levels and testing into the Tokyo session to the 120.40 with light fixing demand saw the top of the market for the day, the speech by President Xi did little to calm the markets and equities started to show red over the session and JPY buying moved into the market as safe haven flows again started to dominate, dropping quickly to trade to the 119.90 levels the market then proceeded through early London trading around the 120.00 levels, the move to the NYK session saw the market quickly dip to the 119.80 levels and then weak stops to 119.60 before holding for a short period and then solid selling of USDJPY into the NYK session, the fact that once London closed the market started to recover from the lows in the 119.20’s and headed steadily higher in waves to the 120.00 levels for the close with hedge funds of particular note over the final 50 pips or so.
• AUD: After a quiet early part to the session with the Oz testing through the 0.7020 levels the market generally moved around the 70 cent levels before cross JPY selling helped persuade the sellers into the grey hours to sell the market lower and through the London session the market eventually pushed to the 0.6940 levels and towards the lows of the year with strong AUDJPY selling adding to the selling however, the market ran out of time and with the Yellen commentary to come the market managed to rally back to the opening levels and triggered light stops through the level to make the high of the day into the close.

Yesterday’s premiership results

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

NZD       Trade Balance (NZD) Aug A -1035M | C -875M | P -649M | R -726M

JPY         PMI Manufacturing Sep (P) A 50.9 | C 51.3 | P 51.7

JPY         All Industry Activity Index M/M Jul A 0.20% | C 0.10% | P 0.30% | R 0.50%

EUR        German GfK Consumer Sentiment Oct A 9.6 | C 9.8 | P 9.9

EUR        German IFO – Business Climate Sep A 108.5 | C 108 | P 108.3 | R 108.4

EUR        German IFO – Current Assessment Sep A 114 | C 114.9 | P 114.8

EUR        German IFO – Expectations Sep A 103.3 | C 101.5 | P 102.2

GBP       BBA Loans for House Purchase Aug A 46.7K | C 46.3K | P 46.0K | R 46.3K

USD       Initial Jobless Claims (SEP 19) A 267K | C 268K | P 264K

USD       Durable Goods Orders Aug A -2.00% | C -2.20% | P 2.00%

USD       Durables Ex Transportation Aug A 0.00% | C 0.20% | P 0.60%

USD       New Home Sales Aug A 552K | C 515K | P 507K | R 522K

Good Luck,

Andy

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