Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.741 | EURUSD 1.12489 | AUDUSD 0.69845 | NZDUSD 0.63444 | USDCAD 1.3422 | USDCHF 0.97162 | GBPUSD 1.51506 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.04 | 119.705

EUR/USD             1.1261 | 1.1240

EUR/JPY               135.11 | 134.68

AUD/USD            0.7021 | 0.6984

NZD/USD             0.6379 | 0.6340

USD/CAD             1.3431 | 1.3410

EUR/CHF              1.0934 | 1.0922

USD/CHF             0.97175 | 0.97085

GBP/USD             1.5174 | 1.5151

EUR/GBP             0.74285 | 0.74215

For Today

• EUR: At its widest the market touched the 1.1240 area and just above the 1.1260 level however, for the most part the market remained in the 1.1250 areas where it opened with volumes a little better than they’ve been over the past few days. Topside offers from the 1.1280 level and into the 1.1300 with those offers likely to extend in patches to the 1.1350 levels and then weak offers continue into the 1.1400 levels before becoming stronger through the 1.1440 areas. Downside bids light to the 1.1220 levels with bids only tentatively stronger into the 1.1200 areas but then building over the next big figure and only a break through the 1.1100 is likely to attract any significant stops.
• GBP: Opening around the 1.5150 areas the Cable has seen steady buying through the session to push through to the 1.5175 levels late into the session before slipping back below the 1.5170 levels and hold into the grey hours. Topside offers likely to be limited on a move to the 1.5200 levels and a break through the 1.5210 will possibly see weak stops and the ability for the market to test the 1.5250 level however, from there to the 1.5300 areas the market is again likely to struggle against offers which will possibly stretch to the 1.5350 area before the market sees more open space to the topside. Downside bids into the 1.5150 levels, with the market likely to see bids through the level however, a push through the 1.5100 areas will open the market of a test to the 1.5000 areas and possible option related plays around the area and then likely stops through the level opening the market for a deeper move and ranges from earlier in the year from 1.5000 down to the 1.4600 areas however, there is some congestion through the 1.4900 areas and into 1.4800.
• JPY: With equity market in the green for the day USDJPY has been particularly quiet trading from the opening 119.75 areas and testing a couple of times above the 120.00 areas before drifting back to those opening levels but generally holding around the 119.90 levels into the grey hours. Topside offers through the 120.00 and likely to 120.20 before the slight chance of stops however, the offers are likely to continue and a push through the 120.30-40 areas will likely open up another test of the 121.00 areas with offers extending into the 121.30-40 areas limiting further gains. Downside bids light through the 119.50 areas and becoming stronger as the market approaches the 119.20 levels and then increasing too the 118.80 area, a push through he would likely see the same pattern however, for the moment the market is likely to stay contained.
• AUD: A fairly quiet day for the Oz however, with risk being back in vogue for the day and the equity market lifting during the session cross Yen buying particularly AUDJPY carry saw some movement and Oz was able to again test the 0.7020 levels with little success however, having moved from the 0.6980 levels on the opening the market has not been much below the 70 cent levels since. Light offers into the 0.7020 areas are likely to continue to the 0.7040 areas and a push through the 0.7060 level will allow the market to again test above the 71 cent level however, stops are likely to be few and far between. Downside bids remain in abundance on any move below the 0.6960 areas with those strong bids increasing into the lows of the year and the 69 cent level, a push through this level will see strong selling likely to enter the market from the breakout types and the market possibly testing lower quickly before meeting any support possibly into the 0.6830-0.6800 areas.

Overnight News

CNY: China Expects Current Account Surplus to Continue in 2H: SAFE

China Revises 2Q Current Account Surplus to $73b

China End-June Overseas Financial Assets $6.43t, SAFE Says

Chinese Property Sector’s Sales Growth to Be Resilient: Moody’s

JPY:

Japan Needs More Economic Stimulus, Abe Adviser Honda Tells FT

Abe Plans to Reshuffle Cabinet, Ruling Party Officials Oct. 7

Japan Weaker Saving Bias May Raise Risk for Public Debt: Moody’s

Japan Aug. Industrial Production Falls 0.5% M/m; Est. +1%

Japan Aug. Retail Sales Unchanged M/m; Est. +0.5%

USD/JPY:

Biden, Japan’s Abe Discuss TPP Issues Ahead of Atlanta Summit

EUR:

Euro Area Needs Clear Sovereign default rules: Weidmann in Kathimerini

GBP:

U.K. Sept. GfK Consumer Confidence +3 vs Est. +5

AUD:

Australia Aug. Credit to Business, Consumers Rose 0.6% M/m

Australia Aug. Building Approvals Fell 6.9% M/M; Est. 2% Drop

NZD:

New Zealand Business Confidence Recovers From Six-Year Low: ANZ

N.Z. Non-Residential Approvals Boosted by Science Centre

Today’s data

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

21:45     NZD       Building Permits M/M Aug A -4.90% | P 20.40% | R 20.30%

23:05     GBP       GfK Consumer Sentiment Sep A 3 | C 5 | P 7

23:50     JPY         Industrial Production M/M Aug (P) A -0.50% | C 1.10% | P -0.80%

23:50     JPY         Retail Trade Y/Y Aug A 0.80% | C 1.30% | P 1.60% | R 1.80%

0:00        NZD       NBNZ Business Confidence Sep A -18.9 | P -29.1

1:30        AUD       Building Approvals M/M Aug A -6.90% | C -1.90% | P 4.20% | R 7.90%

5:00        JPY         Housing Starts Y/Y Aug A 8.8% | C 7.70% | P 7.40%

6:00        CHF        UBS Consumption Indicator Aug P 1.64

7:00        CHF        KOF Leading Indicator Sep C 101.2 | P 100.7

7:55        EUR        German Unemployment Change Sep C -5K | P -7k

7:55        EUR        German Unemployment Rate Sep P 6.40%

8:00        EUR        Italian Unemployment Rate Aug (P) C12.00% | P 12.00%

8:30        GBP       Current Account (GBP) Q2 C -22.3B | P -26.5b

8:30        GBP       GDP Q/Q Q2 (F) C 0.70% | P 0.70%

8:30        GBP       Index of Services 3M/3M Jul C 0.80% | P 0.70%

9:00        EUR        Eurozone Unemployment Rate Aug C 10.90% | P 10.90%

9:00        EUR        Eurozone CPI Estimate Y/Y Sep C 0.00% | P 0.10%

9:00        EUR        Eurozone CPI – Core Y/Y Sep (A) C 0.90% | P 0.90%

12:15     USD       ADP Employment Change Sep C 185k | P 190k

12:30    CAD       GDP M/M Jul C 0.20% | P 0.50%

13:45     USD       Chicago PMI Sep C 53.1 | P 54.4

14:30    USD       Crude Oil Inventories P -1.9M

Harry Hindsight              

• EUR: Moving from the opening 1.1245 areas the market drifted into the Tokyo session dropping to the 1.1230 levels before rising sharply as JPY buying moved into the market with equities drifting lower, the market pushed above the 1.1250 from the lows and then struggled through the balance of the session pushing briefly above the 1.1260 level but generally holding the 1.1250 into the grey hours, early London took the market to its highs for the first time this week to test the 1.1280 levels but found sufficient offers to hold the move and the market dropped back on the official opening, Eurozone numbers did little for the market and although overall they were better than expected the market continued to fall taking out the previous lows and trading quietly around that area into the NYK session, early NYK bought USD’s initially to make the lows just through the 1.1200 levels before the market steadily moved back to mid-range and held that 1.1250 level to the close.
• GBP: Cable did very little through the Asian session, opening around the 1.5175 levels and then drifting steadily lower to the 1.5160 areas into the London session, London were light buyers and the market moved steadily to test to the 1.5205 area as EURGBP saw light profit taking moving in and the cross moved off the highs above 0.7430 and down through to the 0.7380 areas, which more or less caused the Cable high. Trading through to the opening in NYK saw the Cable more or less holding around the 1.5180 areas before the USD buying moved in with the open and Cable dropped back to trade for an extended period around the 1.5150 levels with a brief period below 1.5130 before recovering and pushing back to trade around the 1.5160 areas, the last few hours were disappointing again and the market slipped back to hold the 1.5150 level into the close.
• JPY: USDJPY selling started shortly after the opening having briefly flirted with the 120.00 areas before JPY buying kicked in as the Equity markets turned south and safe haven flows dominated the Asian market to some degree, moving to the 119.60 areas the market ran out of anywhere to go with the market unwilling to take the market in either direction and traded into the London session holding the levels after narrow trading, the grey hours followed the move but again there was little impetus in the movement, stalling at the 119.20 areas and the appearance of the London official opening saw the market again rallying back to test the 120.00 again, this time trading a little through the level and then struggling through to the NYK session trading in the 119.80-120.00 levels until the end of the London session where the market saw a brief move to the 120.15 areas as day trading shorts quickly covered their positions for the day and a steady drift lower to the 119.80 areas and a long drawn out run to the close.
• AUD: The Oz drifted from the opening to the 0.6950 levels with a good two way battle around the area however, the market was unable to push through the bids and remained mired to the level dipping briefly to the slightly below the 0.640 levels and into the London session, early London had also sold into the waiting bids and the move back to 0.6950 was sufficient to prove they were wrong and a small short squeeze saw the shorts cutting and running with the market pushing through the 0.6980 levels, the market then held around the levels into the NYK session and steady buying in the futures market was sufficient to take the market through the 0.7020 areas at the peak of the market then a steady drift to the close.

Yesterday’s premiership results

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

06:00     EUR        German Import Price Index M/M Aug A -1.50% | C -1.50% | P -0.70%

08:30     GBP       Mortgage Approvals Aug A 71K | C 70K | P 68.8k

08:30     GBP       M4 Money Supply M/M Aug A -0.40% | C 0.70% | P 1.00%

09:00     EUR        Eurozone Business Climate Indicator Sep A 0.34 | C 0.21 | P 0.21

09:00     EUR        Eurozone Economic Confidence Sep A 105.6 | C 104 | P 104.2 | R 104.1

09:00     EUR        Eurozone Industrial Confidence Sep A -2.2 | C -3.9 | P -3.7

09:00     EUR        Eurozone Services Confidence Sep A 12.4 | C 10 | P 10.2 | R 10.1

09:00     EUR        Eurozone Consumer Confidence Sep (F) A -7.1 | C -7.1 | P -7.1

10:00     GBP       CBI Reported Sales Sep A 49 | C 29 | P 24

12:00     EUR        German CPI M/M Sep (P) A -0.20% | C -0.10% | P 0.00%

12:00     EUR        German CPI Y/Y Sep (P) A 0.00% | C 0.10% | P 0.20%

12:30     CAD       Industrial Product Price M/M Aug A -0.30% | C -0.80% | P 0.70%

12:30     CAD       Raw Materials Price Index M/M Aug A -6.60% | C -7.30% | P -5.90%

13:00     USD       S&P/Case-Shiller Composite-20 Y/Y Jul A 5.00% | C 5.10% | P 4.97% | R 4.90%

14:00    USD       Consumer Confidence Sep A 103 | C 97 | P 101.5 | R 101.3

Good Luck,

Andy

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