Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 101.316 | EURUSD 1.10994 | AUDUSD 0.75198 | NZDUSD 0.71358 | USDCAD 1.29601 | USDCHF 0.97494 | GBPUSD 1.29305 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.11072 | 1.1074

USDJPY                 101.421 | 100.752

GBPUSD               1.29999 | 1.28748

AUDUSD              0.75387 | 0.74669

USDCHF               0.97582 | 0.97407

USDCAD               1.29846 | 1.29497

NZDUSD               0.71549 | 0.71172

EURGBP               0.86142 | 0.85433

EURJPY                 112.526 | 111.589

EURCHF                1.08263 | 1.08057

 

For Today

• EUR: The opening around the 1.1100 areas and drifted lower and into the 1.1080 areas through into the mid-session in Tokyo before rising back in quiet trading. Topside offers are light through the 1.1140-60 areas with stronger offers likely to appear into the 1.1180 levels and through the 1.1200 level, a push through the 1.1220 areas could see weak stops appearing and the market opening to the 1.1240-60 areas and possibly stronger offers. Downside bids light through to the 1.1050 areas with some light support into the level and a move through seeing possibly stronger bids on a test of the 1.1000 levels.
• GBP: Cable saw light selling through the 1.2900 areas and testing to the 1.2880 levels before steadily rising with some steady EURGBP selling moving in above the 0.8600 areas on the cross and forcing the market lower too the 0.8540 levels and leading the Cable to a steady rise to test the 1.3000 levels, Topside offers at the highs and possibly weak stops on a move through to the 1.3020 areas and the market and a test of the 1.3050 levels with this level likely to be a stronger test and key to any further move higher and the 1.3150 area likely to be vulnerable to be tested. Downside bids light through to the 1.2900 areas with stronger bids appearing on a move below the area and into the 1.2850 however, as we’ve seen the bids and offers are suspect to rumours and the market opening to sudden moves and possibly 1.2800 a better level.
• JPY: Limited movement and the market unwilling to get to involved with the GBPJPY saw the USDJPY again trading lower with lighter safe haven flows testing through the 101.000 levels before breaking through into the mid-session to push to the 100.75 areas and then struggling back in a much quiet day than the previous one. Topside offers light into the 101.40-60 areas and then opening to possibly weak stops on a move towards the 102.00 levels, further stops a possibility on a move through the level will likely see congestion on a move through to test the 102.50 areas and stronger offers from then on building into the 103.00 levels and through to 103.30 level. Downside bids into the 100.20 levels are likely to be strong and any dip through the 100.00 levels will see plenty of speculation and nervousness in the market of possible verbal intervention at least however, the downside is likely to be a little weak until the 99.00 areas and one suspects that a move through the recent lows is likely to be more of a trigger to a reaction from the BoJ.
• AUD: Moving from an opening around the 0.7515 areas the market traded quietly through to the Tokyo session holding around the level before pushing quietly through to the 0.7535 areas and the S&P outlook for Australia was revised to negative and a quick drop back to the 0.7470 levels however, with the rating affirmed affirming 3 regions at AAA the outlook was quickly forgotten and the market made steady headway back to the opening levels through the balance of the session. Topside offers through the 0.7540 areas see reasonable resistance remaining before the market opens to a weaker topside through to the 0.7600 levels, a push through the topside is likely to see limited offers appearing and those likely to become stronger over the next 50 pips and into the 0.7650 levels however, the topside becomes more vulnerable through the level. Downside bids light through to the 0.7410-00 areas with some strength likely around the level a push through will likely see weak stops and the market opening to a stronger drop with the 73 cent level likely to be key to any further move lower in the short term.

Overnight News

AUD:

Australia Rating Outlook Cut to Negative From Stable by S&P

S&P Sees Iron Ore about $20 Lower Than Aussie Budget Assumes

Australia Intends to Maintain Fiscal Trajectory, Morrison Says

Australia’s June Construction Index Rises 6.5 Pts M/m to 53.2

EUR/GBP:

Post-Brexit Default Unlikely for Non-Financial EMEA Cos: Moody’s

GBP:

U.K. Business Confidence Sinks to 4 1/2-Year Low as Brexit Bites

JPY:

Kuroda: CPI Is Likely to Be Slightly Negative for Time Being

Japanese Bought Net 428.2 Billion Yen Overseas Debt Last Week

Japan Needs Fiscal Stimulus to End Deflation, Abe Adviser Says

BOJ Cuts Economic Assessment of 2 of Japan’s Domestic Regions

Japan MOF, FSA, BOJ to Meet Tomorrow at 9:30am: Reuters

CNY:

China Banking Industry NPL Ratio Exceeds 2% at End-May: CBRC

PBOC Should Stabilize Yuan Via Cross-Border Payment System: News

China Should Impose Property Tax in Tier-1 Cities: Bus. Herald

China Housing Sales to Reach Record in 2016, CASS Says: Daily

USD:

Clinton Avoids Criminal Charges as U.S. Closes Probe of E-Mails

Fed: Technical Error Occurred in Release of June FOMC Minutes

Today’s data

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

JPY         Leading Index May (P) A 100 | C 100.1 | P 100

06:00     EUR        German Industrial Production M/M May C 0.10% | P 0.80%

07:00     CHF        Foreign Currency Reserves Jun P 602.1B

07:15     CHF        CPI M/M Jun C 0.10% | P 0.10%

07:15     CHF        CPI Y/Y Jun P -0.40%

08:30     GBP       Industrial Production M/M May C -0.90% | P 2.00%

08:30     GBP       Industrial Production Y/Y May C 0.50% | O 1.60%

08:30     GBP       Manufacturing Production M/M May C -0.90% | P 2.30%

08:30     GBP       Manufacturing Production Y/Y May C 0.80% | P 0.80%

11:30     USD       Challenger Job Cuts Y/Y Jun P -26.50%

11:30     EUR        ECB Monetary Policy Meeting Accounts

12:15     USD       ADP Employment Change Jun C 151K | P 173K

12:30     CAD       Building Permits M/M May C 2.10% | P -0.30%

12:30     USD       Initial Jobless Claims (JUL 2) C 272K | P 268K

14:00     GBP       NIESR GDP Estimate Jun P 0.50%

14:00     CAD       Ivey PMI Jun C 50.2 | P 49.4

14:30     USD       Natural Gas Storage P 37B

14:30    USD       Crude Oil Inventories P -4.1M

Harry Hindsight              

• EUR: Opening around the 1.1070 levels the market ebbed through the Tokyo session drifting through to the 1.1040 levels in some heavy trading in the other pairs and dragged lower as the Cable moved lower through the session, once the market tested into the 1.1030 areas the market started to recover a little and the move through to the London session saw the market testing back through 1.1050 levels, German Factory orders showed a better reading than the previous month but far less than expected however, the market ignored the data for the most part and rose a little before the Eurozone retail PMI numbers and then dipped back from the 1.1080 levels to the 1.1050 areas again, the move into the NYK session again saw the Euro rising before falling back on a strong ISM number in the US to make the lows of the day to the 1.1030 levels, and then a steady rise to the close with the market pushing gradually back above the 1.1100 levels in steady trading.
• GBP: The ramifications of the Brexit vote continue and the market saw the market opening above the 1.3020 areas it moved into Tokyo seeing early selling enter the market and pushing through the opening to the 1.2960 areas before holding a limited area for a couple of hours, the dip through the 1.2950 levels saw weak stops triggered and weakness quickly appeared with the market dropping quickly and while orderly found little support until 1.2800 was penetrated and a bounce back to the 1.2880 areas, some quick reactions saw the market quickly above the 1.2900 levels and then a steady recovery through into early London testing towards the 1.3000 areas before drifting in a wide range through to the NYK session and another selloff through 1.2900, the market then exhausted traded quietly around the 1.2920 levels to the close.
• JPY: USDJPY saw flows from GBP into Yen as the safe haven kicked in on the Cable fall, with USDJPY dropping in line with the Cable fall and dropping from the opening 101.75 levels to the 101.20 areas holding for a short period before again declining through in a more steady manner to the 100.60 levels before finding some buying moving through seeing AUDJPY taking over to take the market back to the 101.00 areas and a quiet rise through to the 101.20 levels into the London session, EURJPY selling again saw the market in USDJPY slipping lower again and this time the market pushed through to the 100.20 levels with stronger selling meeting some support along the way, the move into the NYK session saw the USDJPY recovering and the rally was continuous through the session pushing back through to the 101.40-50 areas over several hours before holding the 101.30 areas through to the close.
• AUD: The USDJPY fall initially saw the Oz under pressure as margins started to be squeezed and the cross AUDJPY trade pushed the market lower to the 0.7410 levels from the opening around the 0.7460 area and then holding through to the London session and a steady unimpeded rise through to the 0.7520 areas and the close with Oz being buffeted by outside influences. With the FOMC slightly dovish from the past commentary

Yesterday’s premiership results

GBP       BRC Shop Price Index Y/Y Jun A -2.00% | P -1.80%

EUR        German Factory Orders M/M May A 0.00% | C 1.10% | P -2.00% | R -1.90%

EUR        Eurozone Retail PMI Jun A 48.5 | P 50.6

USD       Trade Balance May A -41.1B | C -40.0B | P -37.4B

CAD       Trade Balance (CAD) May A -3.3B | C -2.7B | P -2.9B | R -3.3B

USD       ISM Non-Manufacturing Composite A 56.5 | C 53.3 | P 52.9

USD       FOMC Meeting Minutes

Good Luck,

Andy

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