Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.924 | EURUSD 1.1194 | AUDUSD 0.70309 | NZDUSD 0.64008 | USDCAD 1.32678 | USDCHF 0.97734 | GBPUSD 1.51303 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.06 | 119.78

EUR/USD             1.12045 | 1.11765

EUR/JPY               134.42 | 134.06

AUD/USD            0.7056 | 0.7012

NZD/USD             0.6420 | 0.6385

USD/CAD             1.3270 | 1.3230

EUR/CHF              1.0937 | 1.09275

USD/CHF             0.97785 | 0.9765

GBP/USD             1.5148 | 1.5130

EUR/GBP             0.7397 | 0.73815

For Today

• EUR: A mixed day and limited range for the Euro with the market opening around the 1.1190 areas and trading for a good length of time around that area, moving a little lower to test the 1.1180 areas into the Tokyo session before recovering and heading the other way to test the resolve above the 1.1200 level with little impetus in either direction , the move to the grey hours again had the downside tested and this time moving through the 1.1180 a little before stalling again. Topside offers through the 1.1200 areas and likely to continue to the 1.1230 levels before the likelihood of stops, even then the market seems relatively flat in the short term and any move will be driven solely on the NFP numbers with a push through the 1.1300 level likely to quickly open up the topside to further movement before reaching to better offers into 1.1400 level. Downside bids light into the 1.1150 areas and then giving way to better bids into the 1.1120-00 areas and a solid push through these levels will open up a quick test to the 1.1000 levels.
• GBP: A barely perceptible rise for the Cable moving from the opening around 1.5130 and trading lightly through the 1.5140 areas before holding around the 1.5145 levels for much of the session. With NFP the Cable is at the mercy of the numbers however, some concerns are beginning to appear in the UK economy over current employment levels and the growing shortage of skilled workers likely to impact the wage bill over the coming months and maybe force the hand of the MPC as inflationary pressures build however, rate rises are not likely to solve the problem of missing skilled workers this time around if the present Government are to restrict overseas workers. Topside offers through the 1.5200 levels are likely to give way to weak stops through the 1.5230-40 areas and open the market for a possible quick test to the 1.5300 levels with offers likely to be weak, further gains are likely to be tempered by offers into the 1.5350 areas. Downside bids continue to remain strong to the 1.5100 levels and whether the selling in Cable is over with remains seen however, a push through the 1.5080 areas will likely see weak stops appear and the possibility of a drop to the 1.5000 area being of strong enough impetus to break lower however one suspects and option play will be in effect and may temper the move somewhat.
• JPY: Opening around the 119.90 area the market drifted into the Tokyo session to the 119.80 levels before rising steadily to test above the 120.00 in a fairly quiet session and holding in the area as we head to the grey hours. As with most Friday’s of NFP the USDJPY has been kept in a tight range with the market moving quietly as those not wanting to hold positions over the day close out and head for home and a weekend of no worries, trading from the 119.90 opening the market dipped into the early Tokyo session to test the 119.80 levels before steadily rising to the 120.05 areas and then holding the opening level as it moves to a London session, Topside offers are likely to be fairly strong through to the 120.30 areas however, with strong NFP the topside will quickly open to a fresh test to the 121.00 areas and possibly beyond, downside has strong bids in several places and as long as the bids remain in place will likely slow the decent on a bad number with the 119.80 level protecting weak stops on a move through 119.60 and then a return of bids into the 119.20 and likely to run in a similar pattern however, at this point a break through the 118.80 levels could quiet possibly see another spike lower.
• AUD: With NFP ahead in the day the market has seen average volumes however, the ranges for all the pairs have been fairly quiet and Oz was no real exception, moving from the opening around the 0.7030 levels the market moved steadily to above the 0.7050 levels before positions started to be closed in preparation of the NFP and weekend, the move back through the opening level saw weak longs getting out quickly and the market held the 0.7010 areas before moving back above the 0.7020 into the grey hours. Topside offers into the 71 cent level are likely to give way under pressure however, the market still remains offered on the face of it with further talk of further rate cuts, so 0.7140-60, 0.7200 are likely to be the strongest offers on any move higher. Downside bids as we’ve seen begin in the 70 cent area and the next 80 points have varying bids to the 0.6920 areas and then those bids increase dramatically, only a solid push through that level opens the downside up for further losses.

Overnight News

JPY:

Japanese Companies See Inflation at 1.2% in 1 Year, Down From 2Q

Japanese Households See 3% Y/y Inflation in 1 Year, BOJ Says

Japan Aug. Unemployment Rate at 3.4%; Est. 3.3%

Japan’s Household Spending Bounces Back With 2.9% Gain in August

Suga: TPP Negotiations in Atlanta Extended Through Oct. 2

EUR:

ECB President Mario Draghi Says Economic Growth ’Is Returning’

CNY:

PBOC’s Yi Suggests Punitive Tobin Tax to Deter Yuan Speculators

China’s CSRC Said to Be ‘Mulling Over’ Restarting IPOs: SCMP

AUD:

Australia’s Aug. Private New Home Sales Rise 2.3% M/m

NZD:

N.Z. Export Commodity Prices Post First Gain in Six Months: ANZ

Today’s data

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

JPY         Unemployment Rate Aug A 3.40% | C 3.30% | P 3.30%

JPY         Household Spending Y/Y Aug A 2.90%| C 0.40% | P -0.20%

JPY         Monetary Base Y/Y Sep A 35.10% | C 34.20% | P 33.30%

AUD       Retail Sales M/M Aug A 0.40% | C 0.40% | P -0.10%

08:30     GBP       Construction PMI Sep C 57.5 | P 57.3

09:00     EUR        Eurozone PPI M/M Aug C -0.50% | P -0.10%

09:00     EUR        Eurozone PPI Y/Y Aug P -2.10%

12:30     USD       Change in Non-farm Payrolls Sep C 200k | P 173k

12:30     USD       Unemployment Rate Sep C 5.10% | P 5.10%

12:30     USD       Average Hourly Earnings M/M Sep C 0.20% | P 0.30%

14:00    USD       Factory Orders Aug C -0.60% | P 0.40%

Harry Hindsight              

• EUR: The market moved quietly through the Asian session with a minor movement on the release of the Chinese data with the PMI numbers slightly better than expected and the market dropped from the opening 1.1170 levels to the 1.1160 areas, dipping to the 1.1155 levels before eventually moving lower late into the session and moving into the grey hours trading slightly below the 1.1150 levels, early London did nothing and the market moved into the official opening with light buying taking the market slowly higher, the market eventually lifted to the 1.1165 areas once the release of the Eurozone PMI was released better than expected however, the Euro struggled with a weakening EURGBP cross continuing to pressure the market, the eventual rise in the Euro came once the release in the US of the ISM numbers with the rest for the moment being ignored and the USD dipping a little allowing the Euro to make its way back to the 1.1200 level but unable to move beyond the 1.1210 before drifting back to the 1.1190 levels into the close.
• GBP: Quietly moving through the Asian session, Cable eventually pushed to the mid 1.5130’s from the opening some 10 pips lower, the move into the grey hours saw the Cable dip to its lows and attempt to push through the 1.5110 level before the release of a better than expected PMI number and the market steadily pushing to trade around the 1.5150 levels into the NYK session, EURGBP spent much of the Asian session and into the London session pressing lower as the GBP outperformed the Euro for a period with the cross pushing towards the 0.7350 levels several times, NYK reversed the trend and the cross eventually moved back towards the 0.7400 areas to the close, Cable while rallying with the Euro lost its shine once the initial push to the 1.5180 highs was over and then drifted back to the 1.5130 levels and only just above the opening.
• JPY: USDJPY did very little during the early part of the session and only the release of the China numbers helped the USDJPY move from the opening levels around 119.90 and pushing steadily through the 120.20 levels, the market continued in its attempt to push through the 120.30 areas however as the market moved into the London session the market found less and less impetus and the market started to slide slowly back to the 120.00 with weak stops triggering and the market dropping to the 119.70 levels as the market moved into the NYK session, with the poor ISM numbers the market dipped to 119.50 and struggled for several hours before rising steadily to finish the day around the opening levels.
• AUD: The Chinese numbers helped the Oz test higher through the session after a tentative start dipping from the 0.7010 levels to push to the 70 cent level before the release of Chinese PMI’s helping the Oz to the 0.7030 before a brief pause and then 0.7050 and a steady rise through to the NYK session testing above the 0.7080 levels, the poor US numbers saw the market turn risk averse again with the Oz dropping back to the 0.7020 areas as the USD dropped back so did the Oz with the market finishing the day around the 0.7030 areas only slightly better than the opening.

Yesterday’s premiership results

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

CHF        Retail Sales (Real) Y/Y Aug A -0.30% | C 0.30% | P -0.10% | R 0.10%

CHF        SVME-PMI Sep A 49.5 | C 51.9 | P 52.2

EUR        Italy Manufacturing PMI Sep A 52.7 | C 53.4 | P 53.8

EUR        Eurozone Manufacturing PMI Sep (F) A 52.7 | C 52 | P 52

GBP       UK PMI Manufacturing Sep A 51.5 | C 51.3 | P 51.5

USD       Challenger Job Cuts Y/Y Sep A 93.20% | P 2.90%

USD       Initial Jobless Claims (SEP 26) A 277K | C 273K | P 267K

USD       Construction Spending M/M Aug A 0.70% | C 0.60% | P 0.70%

USD       ISM Manufacturing Sep A 50.2 | C 51 | P 51.1

USD       ISM Prices Paid Sep A 38 | C 40 | P 39

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.