Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 120.585 120.445-65 | EURUSD 1.11985 1.1181-1.1210 | AUDUSD 0.70268 0.7001-33 | NZDUSD 0.63835 0.6362-80 | USDCAD 1.33297 1.3312-35 | USDCHF 0.97885 0.97505-0.9819 | GBPUSD 1.51828 1.5162-1.5215 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.60 | 120.25

EUR/USD             1.1215 | 1.11755

EUR/JPY               134.90 | 134.45

AUD/USD            0.7035 | 0.7010

NZD/USD             0.6403 | 0.6358

USD/CAD             1.3343 | 1.3321

EUR/CHF              1.0966 | 1.0950

USD/CHF             0.9800 | 0.9782

GBP/USD             1.5210 | 1.5181

EUR/GBP             0.7375 | 0.7362

For today

• EUR: Mixed and confusing day with the Euro opening slightly lower as you’d expect after the vote in Catalonia however, as the USD started to slip lower the Euro managed to push through the 1.1200 level and push to the 1.1215 areas before finding sufficient offers and the market slipped steadily lower as the tone in the market changed however, although the market pushed into the 1.1180 areas it held into the grey hours and only a little short of the opening areas. Topside offers into the 1.1220 areas with a possibility of weak stops through the 1.1230 areas and then a weak extension of offers through to the stronger offers towards the 1.1300 areas. Downside bids light through the 1.1180 areas and no real stops showing in the immediate areas however, the 1.1120-00 areas is likely to be well protected for the moment and a push through the area could see weak stops increasing below the 1.1070 areas and although the bids are likely to reappear on the move lower the downside is likely to remain open for further tests of the 1.1000 areas.
• GBP: Opening around the 1.5200 the first hour or so saw very little interest and a wide market until closer to the Tokyo session which was noticeable more in Cable but not confined to GBP, moving from the opening the market tested lower to the 1.5190 into the Tokyo opening with only limited tests to above the 1.5200 levels. Topside offers light through the 1.5220-40 areas before stronger offers are likely to appear above the 1.5290 and into the 1.5300 areas. Downside bids into the 1.5150 areas then give way to the downside 1.5000 levels. The FT reports the withdrawal of Billions of Saudi investments as the drop in the oil prices squeezes the local economies, given the strong perchance of Cable buying as a vehicle linked with the Saudi Dollars I would not be surprised to find that the weakness in the GBP over the past couple of weeks behind its move lower.
• JPY: USDJPY opened around the 120.50 areas before touching to the 120.60 in early trading before dropping back steadily lower but never quiet pushing to the 120.20 and the stronger support levels. Downside bids light through the 120.20 levels and a push though the 119.80 level will see weakness continuing with weak stops through the 119.70 levels before stronger bids start to appear in to the 119.20 levels. Topside offers are light until above the 121.00 areas having pushed through the levels at the end of last week with strong buying taking out the offers, a push through the 121.30 areas will likely see the market again opening to test to the 124.00 areas with offers likely to dominated by that strong buying.
• AUD: A quiet session with the market opening towards the 0.7030 levels and then drifting around the 0.7020 levels with little movement in the market. Topside offers through the 0.7040 are likely to be weak but with the market now believing that the chances of an interest rate cut are increasing so any move higher is likely to find increasing offers appearing on calls, beyond the 0.7060’s levels the market is likely to see weak stops and the market opening for another test above to the 0.7150 levels. Downside is still dominated by the bids around the 0.6950-20 levels and the lows for the year.

Overnight News

IMF:

IMF Set to Cut Global Growth Forecasts, Lagarde Tells Les Echos

SAR:

Fund Managers Feel Pinch as SAMA Pulls Funds Amid Oil Slump: FT

JPY:

Japan GPIF Signs UN Principles for Responsible Investment: Abe

JPY/KRW:

Japan’s Abe Briefly Meets S. Korea’s Park at UN, NHK Says

CNY:

China Should Be Prudent in Opening Capital Account: Bus. Herald

China’s Aug. Industrial Companies’ Profit Falls 8.8% Y/y

EUR/CNY:

EU, China Sign Agreement for Cooperation in 5G Mobile Network

NZD:

RBNZ Says New Zealand Economy Has Performed Better Than Others

RBNZ to Pay NZ$510m Dividend to Government, Annual Report Shows

Today’s data

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

12:30     USD       Personal Income Aug C 0.40% | P 0.40%

12:30     USD       Personal Spending Aug C 0.30% | P 0.30%

12:30     USD       PCE Deflator M/M Aug C 0.00% | P 0.10%

12:30     USD       PCE Deflator Y/Y Aug P 0.30%

12:30     USD       PCE Core M/M Aug C 0.10% | P 0.10%

12:30     USD       PCE Core Y/Y Aug C 1.20% | P 1.20%

14:00     USD       Pending Home Sales M/M Aug C 0.40% | P 0.50%

Weekend News

JPY:

Abe, Komeito Leader Agree on Reduced Tax Rates, Yomiuri Reports
Disney in China to Aid Casual-Clothes Sales, Uniqlo Chief Says
JPY/EUR:

Suzuki Motor Says It Sold All Its Shares of Volkswagen
EUR:

Greece Eases Capital Controls; Extends Banks 1H Earnings
Greece to Set Up Loan Supervision Body by Nov, Stathakis Says
Portuguese Ruling Coalition Maintains Lead in Poll, Publico Says
EUR/TRY:

Germany, Turkey Agree to Work More Closely on Refugees
CNY:

China to Set Up $2 Billion Fund to Help Developing Countries
China Approves Plan to Boost Economic Growth of Northern Region
GBP:

Almost Half of U.K. Supports Military Action in Syria: Sky News
Cameron Seeks Refugee, Development Cash, action on Syria at UN
USD:

Kerry Sees UN Talks Advancing Efforts to Resolve Syria Conflict

Harry Hindsight

• EUR: A quiet Asian session saw the Euro move from the opening 1.1210 areas and quickly through to through to test the 1.1170 levels as Yellen’s speech more hawkish than expected saw the USD rally quickly and then remain in the 1.1170-80 area for the bulk of the Asian session, early London were quick sellers and the market followed through on the official opening to test to the 1.1120 areas before finding sufficient buyers to hold the market and trigger light buying and a return to the 1.1170 level, the move into NYK saw weak selling again however although the market tested the downside briefly with a better US GDP number than expected for the Annualized Q2 number saw the 1.1130 penetrated however, the market started to recover after the knee jerk reaction and the market trade steadily through the session to test above the 1.1200 levels and then continued to push the highs into the close.
• GBP: A quiet move through to deep into London, with the market moving around the 1.5220-30 levels for the Asian session and a spike higher into the grey hours before, quickly falling back again from the 1.5260 highs of the day and gain holding the 1.5220-30 level to the NYK opening, early NYK came in selling strongly and reversing some of the early gains GBP had over the Euro with the cross moving off the 0.7310 levels to extend late into the session in an attempt at the 0.7400 areas, Cable was forced quickly through the 1.5200 levels and repeatedly bounced around the 1.5150 levels before returning to the 1.5200 areas for the close.
• JPY: USDJPY moving quietly through the Asian session trading around the 120.20 levels before moving into the London session and gradually pushing through the 121.00 before stalling at the 121.20 areas, failing to move through the level the move into the NYK session saw the market drop back to the 120.60 levels quickly before holding between that level and 120.90 to the close in a quietening market.
• AUD: The Oz remained pinned in a narrow range unable to push beyond the 0.7040 levels which it attempted into the grey hours and struggling on each time it pushed through the 0.7000 level with the market held around the 0.7010 areas for the most part in quiet trading.

Friday’s premiership results

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%

EUR        Eurozone M3 Y/Y Aug A 4.80% | C 5.40% | P 5.30%

USD       GDP (Annualized) Q2 (F) A 3.90% | C 3.70% | P 3.70%

USD       GDP Price Index Q2 (F) A 2.10% | C 2.10% | P 2.10%

USD       U. of Michigan Confidence Sep (F) A 87.2 | C 87 | P 85.7

Stay lucky

Andy

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