Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 104.678 | EURUSD 1.10613 | AUDUSD 0.76227 | NZDUSD 0.73098 | USDCAD 1.30421 | USDCHF 0.98907 | GBPUSD 1.32472 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.10702 | 1.10536

USDJPY                 104.878 | 103.945

GBPUSD               1.33389 | 1.32234

AUDUSD              0.76246 | 0.75859

USDCHF               0.98913 | 0.98791

USDCAD               1.30844 | 1.30319

NZDUSD               0.73029 | 0.72536

EURGBP               0.83583 | 0.83000

EURJPY                 116.061 | 114.918

EURCHF                1.09428 | 1.09261

 

For Today

• EUR: A very quiet session today with the market drifting sideways for the most part holding the opening areas around the 1.1060-70 level in a very tight range. Topside offers reappear through the 1.1100 levels with likely weak stops now above the 1.1130 levels with a significant push through the 1.1160 offers likely to open the topside for a better move to the 1.1250 areas and possibly stronger offers appearing. Downside bids into the 1.1020 areas with weak stops and possible stronger stops through the level meeting better bids through the 1.0950-00 areas, a push through the level though will likely see stronger stops appearing with the market opening for a move through to last year’s lows opening up for some time in the future.
• GBP: Cable saw some choppy movement with the market seeing some light GBPJPY selling profit taking moving in and then rebounding a little as the Cable moved through the 1.3300 levels to spike to the 1.3340 areas before dipping back through to the 1.3250 level and moving back to the 1.3300 levels, Topside offers around the current levels cleared however stronger offers are likely into the 1.3350 areas before the 1.3400 level becomes vulnerable, downside bids weak through to the 1.3200 levels and given the rapid rise over the past few days those sentimental levels are likely to be a little weak and one would have to be careful of cross interest appearing in the market and forcing the GBP lower, a push through the 1.3200 will likely see weak stops appearing in both Cable and the crosses and the market dipping back to the lower levels again as liquidity disappears.
• JPY: After yesterday’s rise the market seems to have taken a breather with the market opening around the 104.80 areas and gradually slipping back through the session to test lightly through the 104.00 level before regaining a little of the losses and holding through to the London session around the 104.20 areas, with Suga reporting no concrete monetary policy steps by the BoJ and more of looking for what is desirable, whatever that may be. Topside offers into the 105.00 levels are likely to be a little stronger having failed the level however, that doesn’t discount further rumours on the subject of easing and the move through is likely to see only weak offers on a run to the 106.00 levels and possibly stronger offers from the 105.80 levels appearing in the market, a push through the 106.20-30 areas will quickly see the market rising with very little around until 107 and the market possibly squeezing as any shorts quickly bow out, downside bids light into the 103.80 areas with weak stops on a move through and the downside struggling for support until closer to the 103.00 levels.
• AUD: With a weaker USDJPY so too did the AUDJPY react not quite as strongly however, there was limited selling seen through the cross forcing the Oz to retrace through the 76 cent levels and test the 0.7580 areas before moving back to above the figure level and holding in a tight 0.7600-10 range for the most part. Topside offers through the 0.7650 level is likely to continue on a run to the 0.7700 areas with only limited stops along the way, a move through the 77 cent level is likely to continue to see congestive offers in the market and the topside struggling for some momentum, however, any push above the 0.7760 level should see the market quickly contesting the 78 cent levels and the RBA becoming concerned again about the high level of the currency and possible chatter through the media on the subject. Downside bids into the 0.7500 level is likely to see some bids appearing and only a strong push below 0.7440 is likely to disturb the market sufficiently to trigger any weak stops and the potential for limited movement through 74 cent.

Overnight News

JPY:

Suga: Not True Government Considering ’Helicopter Money’

Japan Government Mulls ‘Helicopter Money’ Policy, Sankei Says

Abe Adviser Hamada: Best to Coordinate Fiscal, Monetary Stimulus

Japanese Public Expects Debate on Constitution: Yomiuri Poll

Japan National Pension Eases Bond-Buying Rules in Hunt for Yield

USD:

Fed’s Kashkari Says June U.S. Payroll Report Was ‘Very Strong’

Fed’s Kashkari Says Fed Can Remain Patient on Raising Rates

Fed’s Mester Says Brexit Impact on U.S. Economy Hinges on Dollar

Federal Reserve’s Mester Says Every Meeting on Table

NZD:

RBNZ Says Understanding Low Inflation Is a Strategic Priority

NZ Residential Property Asking Price Rises 1.1% M/M: Trade Me

AUD:

Australia’s Policy Uncertainty Rises after Election, Fitch Says

Australia July Consumer Confidence Falls 3% M/m to 99.1

Today’s data

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

AUD       Westpac Consumer Confidence Jul A -3.00% | P -1.00%

JPY         Industrial Production M/M May (F) A -2.60% | C -2.20% | P -2.30%

0700     CNY         Trade Balance Jun C 46.0B | P 50.0B

0700     CNY         Trade Balance CNY Jun C 320B | P 325B

09:00     EUR        Eurozone Industrial Production M/M May C -0.80% | P 1.10%

12:30     USD       Import Price Index M/M Jun C 0.60% | P 1.40%

14:00     CAD       BoC Rate Decision C 0.50% | P 0.50%

14:30     USD       Crude Oil Inventories P -2.2M

18:00     USD       Monthly Budget Statement Jun C 24.2B | P -52.5B

18:00    USD       Fed Beige Book

Harry Hindsight              

• EUR: Opening around the 1.1060 levels the market ebbed slightly into the move into the Tokyo session however, a weaker Yen saw the cross JPY buying move into the market and the Euro moved into the 1.1090 areas during the mid-session period and held in the area for the move into the London session, holding around the 1.1090, the market eventually tested through the 1.1100 levels testing through the 1.1120 areas before slowly drifting through the balance of the session as the Euro lost ground against the GBP drifting throughout the day from the opening above 0.8500 to test to the 0.8340 levels into the close. Euro’s saw some limited movement around the NYK options fix with the market testing the opening levels and bouncing quickly back to 1.1090 area and then again pushing towards the opening levels.
• GBP: Cable continued its rise for the 3^rd day and with limited liquidity the movement was at times quick, with the market moving during the Asian session from the 1.2990 areas through 1.3000 and triggering weak stops through the 1.3020-30 areas and quickly pushing towards the 1.3080 level and holding the levels through to the London session, another quick push in London saw the 1.3100 level breaking easily and moving to the 1.3150 levels with better offers holding the market into the NYK session, option interest saw the market rising through to the 1.3200 levels and then more limited liquidity allowing the market to test to the 1.3290 areas before running out of steam and drifting back to the 1.3250 levels in a quiet run to the close. There was a lot of selling in the EURGBP cross with the market drifting down from above the 0.8520 areas to test to the 0.8340 levels to the close in a fairly steady movement.
• JPY: As with the Cable, the USDJPY saw strong buying through the session again, with political worries past and the safe haven flows starting to steadily reverse and move back out through the session, USDJPY opened around the 102.80 areas and the market initially drifted into the Tokyo session testing to the 102.50 areas before strong buying appeared in the market as comments from MoF suggested further easing interest to be applied shortly however, this is not the first time this has been talked about and although the market continues to buy the rumour one does have to take everything with a pinch of salt, Having quickly made the 103.20 areas from the lows the market held around the 103.00 areas for the move into the London session and then tested higher from the opening in London to push through to the 103.60 areas with light profit taking moving the market back to 103.00 before a steady move through into the NYK session testing the 104.00 levels and triggering stops through the level and a push quickly to the 104.60 areas, the rally was not quiet over and the market slowly rose into the later part of the session to just short of the 105.00 levels before slipping a little lower into the close.
• AUD: Cross JPY buying was the name of the game through the session with the end of safe haven flows for the moment and talk of further easing in Japan the AUDJPY rose higher through the day and the Oz moved higher with it, testing from the opening around the 0.7530 areas to the 0.7590 levels before meeting stronger offers, the market held around the levels until the London session when the market broke through the 76 cent level triggering weak stops in a run to the 0.7630 levels where stronger offers appeared in the market holding in a tight pattern for several hours until the end of the London session and then a quick test to the 0.7650 levels before running out of steam and drifting lower from that point to finish the day around the 0.7620 levels were it had spent so much time.

Yesterday’s premiership results

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%

EUR        German CPI M/M Jun (F) A 0.10% | C 0.10% | P 0.10%

EUR        German CPI Y/Y Jun (F) A 0.30% | C 0.30% | P 0.30%

USD       Wholesale Inventories May A 0.10% | C 0.20% | P 0.60% | R 0.70%

Good Luck,

Andy

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