Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 102.801 | EURUSD 1.10577 | AUDUSD 0.75319 | NZDUSD 0.72183 | USDCAD 1.31164 | USDCHF 0.9829 | GBPUSD 1.29984 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.10915 | 1.10523

USDJPY                 1.30921 | 1.29749

GBPUSD               103.277 | 102.456

AUDUSD              0.75927 | 0.75315

USDCHF               0.98533 | 0.98214

USDCAD               1.31339 | 1.30858

NZDUSD               0.72699 | 0.72135

EURGBP               0.85229 | 0.84644

EURJPY                 114.327 | 113.295

EURCHF                1.08940 | 1.08658

 

For Today

• EUR: Limited action for the most part with the Euro spending the early part of the session lagging behind the Cable and trading around the opening levels before catching a sharp move from the lows in the 1.1055 areas to test to the 1.1090 levels, with cross JPY buying also figuring in the movement, Topside offers continue into the 1.1100 areas with the possibility of weak stops appearing through the 1.1130 areas and limited movement as further offers look to be around the 1.1150 areas and building towards the stronger 1.1180-1.1200 level. Downside bids light through to the 1.1020 areas however, these bids are beginning to look more sustainable with the market struggling through this month so far a push through the 1.1000 level is likely to see stronger bids as the market approaches the 1.0950 areas an beyond with possible strong stops appearing below the 1.0900 areas.
• GBP: Trading quietly through into the Tokyo session the market drifted to hold along the 1.2980 areas from the close before the market started to see stronger buying and limited stops in the GBPJPY to force the Cable through the 1.3000 areas and to the 1.3020 levels the break when it occurred saw the Cable quickly rise to the 1.3080 areas before finding offers appearing in front of the 1.3100 levels, Topside offers through the 1.3100 levels however the market could possibly see further gains once the level breaks with limited offers around the 1.3150 areas and the market open to the 1.3200 before stronger offers are likely with those offers then concentrating around the 1.3250 areas. Downside bids light through to the 1.2980 areas with weak stops likely to appear however, congestion through the 1.2900-50 areas is likely to slow the market if there is no adverse commentary about the Brexit decision along the way and limited data for the day.
• JPY: A weaker Yen as circumstances and risk from politics ebb away, the market saw some early selling as light profit taking moved into the early session however, once the Tokyo session kicked in fully the 102.50 lows were quickly reversed and the market tested through to the 103.00 levels again with equities across the Asian area being boosted and the USDJPY and cross JPY buying appeared in earnest to push the market to the 103.30 areas before trading quietly through the rest of the session around the 103.00 level. Topside offers into the 103.50 areas are likely to be limited however, the offers are possibly a little deeper and through the level the 104.00 area is likely to be stronger through to the 104.30 level before any weakness could appear. Downside bids into the 102.00 areas are likely to be weak and the downside still has potential to surprise with the likelihood of stronger bids only through that area and into the 101.50 areas and down. Talk of further easing again seems to be driving the market a little however; they have disappointed the last two times.
• AUD: The Oz opened around the 0.7535 areas and traded quietly as with the other currencies until the release of the Nab Business number which showed strongly and increased interest in the AUDJPY carry trade saw the Oz push reasonably quickly to the 0.7590 areas before finding sufficient offers to curb the interest and then drifted between the high and 0.7580 for the balance of the session, Topside offers through the 0.7600 areas with possible light stops on a move to the stronger 0.7650 levels however, a push through here will likely open the higher ranges from earlier in the year, Downside bids light through to the 0.7520 areas where one suspects the bids to increase as the market attempts to reverse the recent gains and opening up to a push through to the 0.7440 levels and possible stops.

Overnight News

JPY:

Aso: Will Mull Fiscal Stimulus Package as Soon as Abe Orders It

Japan to Downgrade Fiscal 2016 Growth Forecast to 0.9%: Nikkei

BOJ: Japanese Households See 2% Annual Inflation Over Next 5 Yrs.

Japan June wholesale prices fall 4.2% YoY

EUR:

Bundesbank’s Dombret: No Policy Response Needed to Brexit

IMF Urges Action on Italy’s Retail Investors’ Bank Bail-In

USD:

Mester Says Timing of Fed Move Depends on How Economy Evolves

Fed’s Mester Says Need to Consider Brexit in Medium-Term Outlook

Mester Repeats Fed Policy Shouldn’t Target Financial Stability

GBP:

U.K. LFL June Retail Sales Fall 0.5% Y/y, BRC Says

AUD:

Australia June Business Confidence Rises 3 Pts M/m to 6

RBA’s Ellis Says Lending Standards Have Materially Strengthened

RBA’s Ellis Says Strong Bank Supervision Essential for Stability

Australia ANZ Weekly Consumer Confidence Falls 0.5% to 115.2

Today’s data

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

GBP       BRC Sales Like-For-Like Y/Y Jun A -0.50% | P 0.50%

AUD       NAB Business Confidence Jun A 6 | P 3

JPY         Tertiary Industry Index M/M May A -0.70% | C -0.70% | P 1.40% | R 0.70%

06:00     EUR        German CPI M/M Jun (F) C 0.10% | P 0.10%

06:00     EUR        German CPI Y/Y Jun (F) C 0.30% | P 0.30%

14:00    USD       Wholesale Inventories May C 0.20% | P 0.60%

Harry Hindsight              

• EUR: Contained within a reasonably tight range through the day the Euro opened in Asia drifting from the 1.1055 levels and pushing to the 1.1035 levels before starting a steady climb as the cross JPY trade started to move into the market and forcing the Euro back to the opening levels gain into the London session, with very little in the way of data from Europe the early market saw good selling into the London session and the market tested to the 1.1020 areas before holding through the morning and starting to rise as the market moved towards the NYK session with the pull of Cable as political wrangling for the UK government seemed to be at an end, with Euro’s tagging along for the ride to test through into the NYK session back at the opening levels, uninspiring labour market in the US saw the Euro head to the highs and test the 1.1075 levels however, after a couple of hours weakly attempting to push through the level the market saw short term longs cutting out and the market back through the 1.1050 levels and then gradually moving around the opening levels to finish the day only just above the start of the day.
• GBP: Politics dominated the Cable with expectations of continued wrangling about the leadership of the Government likely to continue into September quickly resolved and by Wednesday the new PM Theresa May will be enthroned, having seen early gains in Asia the market slipped from the highs around the 1.2980 levels to again push through 1.2900 and push to the 1.2860 levels into early morning however, the market eventually rejected the level and given that the UK will shortly have a fully functioning Government again (not hint of sarcasm) and the Cable rallied with the news into the NYK session again testing above the 1.3000 levels but halting again around the 1.3020 level. From there the market was reasonably choppy through to the close but broadly held contact with the 1.3000 levels to the close.
• JPY: A day of politics for the Japanese also saw the USDJPY rising in the direction the MoF and BoJ intended with talk of a fresh mandate for Abenomics and the USDJPY pushing from the opening 100.50 levels to test through the 101.00 level late in the session as the confirmation of Abe’s success, the market didn’t slow its steady rise and continued through the London session gradually rising to the 102.00 areas and slowing its ascent but nonetheless continuing to rise through to the 102.80 areas before finding sufficient offers to hold it in place through to the close of the session.
• AUD: The Oz traded in a narrow band through the session with early AUDJPY selling quickly turning higher as the USDJPY movement started to attract the buyers and the crosses reversing there early movement, moving higher the Oz again tested to the 0.7570 arras before moving into the London session and the early day traders entered the scene with the market dipping back to 0.7535 levels before holding steadily through to the NYK session, the market regained the opening levels however, there was insufficient interest to drive it through and the market spent the rest of the session drifting lower and posted its low early in NYK around the 0.7520 levels before finishing the day just off the level.

Yesterday’s premiership results

CNY        CPI Y/Y Jun A 1.90% | C 1.90% | P 2.00%

CNY        PPI Y/Y June A -2.60% | C -2.60% | P -2.80%

JPY         Machine Orders M/M May A -1.40% | C 2.80% | P -11.00%

JPY         Japan Money Stock M2+CD Y/Y Jun A 3.40% | C 3.40% | P 3.40%

AUD       Home Loans May A -1.00% | C -1.90% | P 1.70% | R 1.40%

JPY         Machine Tool Orders Y/Y Jun (P) A -19.90% | P -24.70%

CAD       Housing Starts Jun A 218K | C 192K | P 188.6K

USD       Labour Market Conditions Index Change Jun A -1.9 | P -4.8 | R -3.6

Good Luck,

Andy

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