Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.884 | EURUSD 1.11769 | AUDUSD 0.70172 | NZDUSD 0.63937 | USDCAD 1.33104 | USDCHF 0.97346 | GBPUSD 1.51268 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.28 | 119.77

EUR/USD             1.1178 | 1.1145

EUR/JPY               134.25 | 133.78

AUD/USD            0.7067 | 0.6998

NZD/USD             0.6428 | 0.6387

USD/CAD             1.3331 | 1.3280

EUR/CHF              1.0888 | 1.0875

USD/CHF             0.9762 | 0.9730

GBP/USD             1.5135 | 1.5121

EUR/GBP             0.7388 | 0.7366

For Today

• EUR: The market continues to steadily reverse last weeks movements, with the Euro drifting through the session, from the opening the market held into the Tokyo session along the 1.1170 levels before a slightly better than expected PMI number for China helped move the USD a little and the Euro slowly dipping through the session to push through the 1.1150 levels and hold just below the level as we move to the grey hours. Downside bids likely light through the 1.1120 level and increasing the closer to the 1.1100 areas you move the stronger the bids, a break through the 1.1080 level is likely to see weak stops and the market opening to the stronger support levels around the 1.1000 area. Topside offers from the 1.1280 level and running through 1.1300 with the markets having been too and through this level sentiment is likely to be controlling the market rather than any technical reasoning and while offers could continue through to 1.1330 areas the market is likely to find very little in the way of another test higher.
• GBP: Cable again pushed a little higher on a weak EURGBP cross but the day was limited moving from just below the 1.5130 levels to test only just above the level with the EURGBP cross testing from the 0.7390 opening levels through to below 0.7370. Topside offers weak through the 1.5200 levels and better offers into the 1.5250-80 areas a break through the 1.5300 level will open the market to weak stops and another test higher likely to open up. Downside bids still remain into the 1.5100 levels and only a strong push through the 1.5080 area is likely to open the market up and then the market will be able to test the resolve of the market around the 1.5000 with a break here confirming further downward trend.
• JPY: Today was the Tankan however, the market more or less ignored it with only a minor fluctuation sending the USDJPY to the lows for the day just through the 119.80 levels before recovering back to the opening levels and into the CNY release and the USDJPY climbing quickly higher to test the 120.20 levels and holding the areas into the grey hours. Topside offers continue into the 120.60 levels before opening for a test of 121.00 however, without some clear fundamental reason the market is likely to stall again on a test through the level with only a break of the 121.30 level likely to open up the topside and only limited potential for the moment of testing the 122.00 areas. Downside bids through the 119.80 level seem to have light bids with mixtures of weak stops however, as the market moves to the 119.20 areas the bids will likely increase and the market continue like this through to the 118.80 areas, for the most part inflows and outflows has been reasonably balanced and would fit with the patterns we’ve seen through September.
• AUD: The Oz continues to recover over the session with the USD rising against most of the majors, the Oz has also reversed the recent sell off in the commodity currencies, opening around the 0.7010 level the market initially dipped to trade just through the 70 cent level and put the low in before rising slowly to the release of the CNY numbers, a good number and the Oz quickly rose to the 0.7030 level however, it’s been a little bit of a grind since then to push through to the 0.7060 levels before holding steady around the 0.7050 areas. Light offers from current levels to the 0.7080 levels before the market has room to move through the 71 cent level with another round of offers from 0.7140 to the 0.7160 area kick in these are likely to be a little stronger and while the market can possibly push through the levels the 72 cent is possibly a little harder and a similar set up. Downside bids light to the 70 cent level with the bids increasing as the market moves through onto the 69 cent handle with bids into the 0.6980 levels and then repeating every 10 pips or so with large bids below the 0.6950 level in particular.

Overnight News

CNY:

China Sept. Manufacturing PMI 49.8; Est. 49.7

Caixin China Sept. Manufacturing PMI 47.2; Est. 47

CNY/HKD/KRW/JPY:

China Hard Landing Would Hit HK, Korea, Japan Hardest: Fitch

JPY:

Japan Sept. Large Manufacturer Tankan Falls to 12; Est. 13

Japanese Bought Net 1 Trillion Yen Overseas Debt Last Week

Japan Bank, Insurer Paper Profits Fall, Nikkei Says

Japan Pension Fund July-Sept. Loss Likely 9.4t Yen: Nikkei

Japan Pension Fund to Invest in Junk Bonds, Nikkei Says

Nikkei Japan Sept Manufacturing PMI 51 vs. 51.7 in Aug.

More Stimulus Is Likely From BOJ, Says Ex-Deputy Governor Iwata

GBP:

U.K. Manufacturing-Exports Gauge Fell to 6-Year Low in 3Q: BCC

Former U.K. Chancellor Lawson Will Campaign for EU Exit: Times

AUD:

Australia Sept. Manufacturing Index Rises 0.4 Pt M/m to 52.1

NZD:

New Zealand House Prices Rise at Fastest Pace since Late 2007

Today’s data

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

JPY         Tankan Large Manufacturers Index Q3 A 12 | C 13 | P 15

JPY         Tankan Large Manufacturers Outlook Q3 A 10 | C 10 | P 16

JPY         Tankan Non-Manufacturing Index Q3 A 25 | C 21 | P 23

JPY         Tankan Non-Manufacturing Outlook Q3 A 19 | C 19 | P 21

JPY         Tankan Small manufacturing Index Q3 A 0 | C -2 | P 0

JPY         Tankan Small manufacturing Outlook Q3 A -2 | C -4 | P 0

JPY         Tankan Small Non- manufacturing Index Q3 A 3 | C 2 | P 4

JPY         Tankan Small Non- manufacturing Outlook Q3 A 1 | C 0 | P 1

JPY         Tankan Large All Industry Capex Q3 A 10.90% | C 8.50% | P 9.30%

CNY        Manufacturing PMI Sep A 49.8 | C 49.7 | P 49.7

CNY        Non-manufacturing PMI Sep A 53.4 | P 53.4

CNY        Caixin Manufacturing PMI Sep (F) A 47.2 | C 47.2 | P 47

CNY        Caixin Services PMI Sep A 50.5 | C 51.2 | P 51.5

07:15     CHF        Retail Sales (Real) Y/Y Aug C 0.30% | P -0.10%

07:30     CHF        SVME-PMI Sep C 51.9 | P 52.2

07:45     EUR        Italy Manufacturing PMI Sep C 53.4 | P 53.8

08:00     EUR        Eurozone Manufacturing PMI Sep (F) C 52 | P 52

08:30     GBP       UK PMI Manufacturing Sep C 51.3 | P 51.5

11:30     USD       Challenger Job Cuts Y/Y Sep P 2.90%

12:30     USD       Initial Jobless Claims (SEP 26) C 273K | P 267K

14:00     USD       Construction Spending M/M Aug C 0.60% | P 0.70%

14:00     USD       ISM Manufacturing Sep C 51 | P 51.1

14:00    USD       ISM Prices Paid Sep C 40 | P 39

Harry Hindsight              

• EUR: Asia was quiet with the market trading in a 10 pip range for the early part of the session opening around the 1.1250 levels before dipping from just above the 1.1260 level to touch the 1.1240 areas, the market then recovered into the grey hours before early London came in selling and taking the market down to the 1.1220 areas before holding through the early part of London. With mixed employment numbers the Euro continued to weaken through the session and into NYK trading to the 1.1160 levels with light stops through the 1.1200 areas but not of real significance. By the end of the London session the market held steady on the 1.1160 levels and then ranged to the close in a narrowing movement to the close into the 1.1170 levels.
• GBP: As with the Euro the market moved quietly through the bulk of the Asian session holding the 1.5150 areas the move into the grey hours saw the market drop from its highs above 1.5170 and into the London official opening dropping quickly to test the 1.5130 areas, the release of the UK numbers saw the market react quickly to a final GDP number and Current Account number with the market quickly to the 1.5210 areas however, as the Cable again started to fall back EURGBP cross limited the declines for much of the session with the cross moving off the 0.7430 highs and through London to test below 0.7370 and trade around the 0.7390 levels to the close. Cable dropped steadily through the NYK session being dragged lower by the Euro however; the market was left around the 1.5120 levels to the close and less of a drop than the Euro.
• JPY: USDJPY again remains in a tight range over the day opening around the 119.75 levels and steadily rising to above the 120.35 level through into the London session with the equity markets rising and the Asian markets willing to take on risk again, with the early rise lifting to test above the 120.00 levels before running out of steam and dipping back to the opening levels, the move into the grey hours again saw the 120.00 levels being tested and the markets move into the London session continuing the rise and making the highs eventually as USD rose more or less across the board. The move into the NYK session saw the market again turning as the cross JPY sellers moved in with EURJPY dipping and taking the USDJPY leg with the selling falling back to 119.55 areas before bouncing off the previous day’s low and moving back to test towards the 120.00 levels again.
• AUD: The opening was the lowest the market went and traded quietly higher moving through to the 0.7020 levels into early Tokyo having seen the equity markets rallying the market through off the safe haven shackles and commodities currencies started to a little better against the USD, the move into the London session saw early sellers taking the market back to the 0.6990 level however, while the recovery took a little longer the rally pushed through the 0.7020 areas with weak stops opening the topside a little and the market moved comfortably to the 0.7035 levels and held deep into the NYK session, Chicago PMI numbers were the only deflection of the market and the market held the 0.7020 areas for awhile before futures selling pushed the market steadily below however, that was about all and the market generally did very little during the late NYK and finished around the 0.7020 areas.

Yesterday’s premiership results

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

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

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

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

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

NZD       NBNZ Business Confidence Sep A -18.9 | P -29.1

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

JPY         Housing Starts Y/Y Aug A 8.80% | C 7.70% | P 7.40%

CHF        UBS Consumption Indicator Aug  A 1.63 | P 1.64

CHF        KOF Leading Indicator Sep A 100.4 | C 101.2 | P 100.7

EUR        German Unemployment Change Sep A 2K | C -5K | P -7k | R -6K

EUR        German Unemployment Rate Sep A 6.40% | P 6.40%

EUR        Italian Unemployment Rate Aug (P) A 11.90% | C 12.00% | P 12.00%

GBP       Current Account (GBP) Q2 A -16.8B | C -22.3B | P -26.5b | R -24.0B

GBP       GDP Q/Q Q2 (F) A 0.70% | C 0.70% | P 0.70%

GBP       Index of Services 3M/3M Jul A 0.80% | C 0.80% | P 0.70%

EUR        Eurozone Unemployment Rate Aug A 11.00% | C 10.90% | P 10.90%

EUR        Eurozone CPI Estimate Y/Y Sep A -0.10% | C 0.00% | P 0.10% | R 0.10%

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

USD       ADP Employment Change Sep A 200k | C 185k | P 190k | R 186k

CAD       GDP M/M Jul A 0.30% | C 0.20% | P 0.50%

USD       Chicago PMI Sep A 48.7 | C 53.1 | P 54.4

USD       Crude Oil Inventories A 4M | C -0.5M | P -1.9M

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.