Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 106.153 | EURUSD 1.10748 | AUDUSD 0.75912 | NZDUSD 0.71097 | USDCAD 1.2945 | USDCHF 0.9825 | GBPUSD 1.32558 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.10806 | 1.10635

USDJPY                 106.337 | 105.656

GBPUSD               1.32740 | 1.32036

AUDUSD              0.75901 | 0.75094

USDCHF               0.98359 | 0.98192

USDCAD               1.29959 | 1.29429

NZDUSD               0.71045 | 0.70140

EURGBP               0.83855 | 0.83433

EURJPY                 117.767 | 116.962

EURCHF                1.08873 | 1.08759

 

For Today

• EUR: A very quiet session with the market trading back in early trading from the 1.1075 levels to the 1.1060’s before holding and then returning to test the 1.1080 levels in a very tight range, Topside light offers through the 1.1100 areas with possible weak stops on a move through the 1.1120 areas and then congestion building on a move to the 1.1150 areas likely weak stops through the 1.1160 areas and then offers continuing on a move towards the 1.1180 levels and then increasing through the 1.1200 levels with break out stops possibly appearing for a quick move through to the 1.1250 offers, and possibly opening the 1.13-1.1450 range. Downside bids are likely to be concentrated through the 1.1050 areas and then increasing as the market moves towards the 1.1000 levels with possible small stops along the way the market is likely to see stronger bids on any attempt into the 1.0950-00 areas.
• GBP: Cable struggled through the session with the market initially moving to above the 1.3270 areas in early trading only to drift lower through the Tokyo session and testing to the 1.3210 areas in quiet trading overall, Downside bids light into the 1.3200 areas, with the market likely to open up for another test of the 1.3150 areas and possibly stronger bids, that is if we can believe the merger and acquisition talks this week, a move through the level though really sees not safe levels until the market starts to push below the 1.3000 areas where bids are likely to be stronger if not exactly firm. Topside offers through the to the 1.3350 areas are likely to be limited and then increasing on any move through 1.3400 areas and possibly particularly strong on any move above that level.
• JPY: USDJPY tested to the 106.30 areas on the first move into the Tokyo session however, having made those highs the market struggled to continue and started to turn lower and drift into the RBA minutes, this saw AUDJPY selling moving in and the market dipped to trade around the 105.70-80 area for the bulk of the session, Topside offers are now likely to appear with a mixture of stops through the 106.30 areas with those weak stops likely to be quickly absorbed and the market struggling to make headways to the stronger 106.70-107.00 levels, a strong push through that level will probably open up the market to the ranges prior to the Brexit vote. Downside bids light through to the 105.50 levels with some light congestion likely to continue through the area to possible stronger bids into the 105.00 level, a break down below the 104.70 areas though is likely to be seen technically as a failure to the topside and possible stronger stops appearing to test the 103.00 stronger bids.
• AUD: The Oz opened around the 76 cent level and limped slowly along into the Tokyo session holding the 0.7580 areas before the release of the RBA minutes with the those minutes adding very little to previous releases although the market interpreted the fact the stronger Oz was tightening conditions and thus leaving the option for further cuts available, and so the Oz dropped in two waves to the 0.7510 levels before finding sufficient bids to hold the market just off those lows. Topside offers are likely now to be a little stronger on any test of the 76 cent level, downside bids likely to continue through the 75 cent levels with a little weakness on a break through the 0.7480 areas however, stronger bids are likely to reappear very quickly on a dip to the 0.7460-40 levels.

Overnight News

GBP:

Brexit vote knock UK manufacturers confidence to 2yr low

Asia/GBP:

Brexit bargains scented by Asia’s rich following pounds plunge

USD/EUR/GBP:

Brexit widens chasm between Wall Street and Europe’s investment banks

AUD:

Turnbull sworn in as Australia’s PM

EUR:

German police kill Afghan teen after train axe attack

Today’s data

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

AUD       RBA Minutes

08:30     GBP       CPI M/M Jun C 0.10% | P 0.20%

08:30     GBP       CPI Y/Y Jun C 0.40% | P 0.30%

08:30     GBP       Core CPI Y/Y Jun C 1.30% | P 1.20%

08:30     GBP       RPI M/M Jun C 0.20% | P 0.30%

08:30     GBP       RPI Y/Y Jun C 1.40% | P 1.40%

08:30     GBP       PPI Input M/M Jun C 1.10% | P 2.60%

08:30     GBP       PPI Input Y/Y Jun C -0.80% | P -3.90%

08:30     GBP       PPI Output M/M Jun C 0.20% | P 0.10%

08:30     GBP       PPI Output Y/Y Jun C -0.50% | P -0.70%

08:30     GBP       PPI Output Core M/M Jun C 0.10% | P 0.00%

08:30     GBP       PPI Output Core Y/Y Jun C 0.60% | P 0.50%

09:00     EUR        German ZEW (Economic Sentiment) Jul C 9.1 | P 19.2

09:00     EUR        German ZEW (Current Situation) Jul C 52 | P 54.5

09:00     EUR        Eurozone ZEW (Economic Sentiment) Jul C 12.3 | P 20.2

12:30     USD       Housing Starts Jun C 1.17M | P 1.16M

12:30    USD       Building Permits Jun C 1.15M | P 1.14M

Harry Hindsight              

• EUR: With the attack in France, and the coup attempt in Turkey the market reacted very little in the end and showed some signs of recovery from the opening, opening slightly higher and then pushing steadily through into the Asian session to test the 1.1070 levels from just below the 1.1050 area, the market held for several hours around the 1.1065 areas into the London session before showing light signs of weakness and drifting to the 1.1040 areas into the mid session in London, as the market moved towards the NYK session it started a steady rise through to the highs before clearing the weak stops form the early sellers to push to the 1.1085 levels and then ranging around the 1.1075 levels into the close.
• GBP: Cable opened little changed from Friday and only once early Japan entered the market did we see movement moving from the 1.3200 levels to test through to the 1.3260 areas in a quick move higher, the market then ranged widely through the day never really able to push below the 1.3220 levels and remaining below 1.3280 areas through to the NYK session, the move into the NYK session saw stronger buying into the London close and testing through the 1.3300 levels towards the 1.3320 levels before drifting back to hold quietly through the session around the 1.3260 levels.
• JPY: USDJPY opened around the 105.40 areas, testing quickly to the 106 level once the early Tokyo traders moved in and then back again once the move was over with, cross JPY buying seemed to dominate the movement and the market then traded around the 105.60 levels through into the NYK session with London having very little impact on the market, the movement eventually turned slightly negative to make the lows into the 105.30 areas before strong buying again started to move higher in a strong move to the 106.20 levels to post highs just above the 106.20 areas and holding quietly through the session.
• AUD: Opening just below the 76 cent levels the market then traded in a very tight range through the day, with the market dipping only slightly through the 0.7580 areas and unable to push above the 0.7610 levels in one of the quietest days the market has seen for a good while.

Yesterday’s premiership results

NZD       CPI Q/Q Q2 A 0.40% | C 0.50% | P 0.20%

NZD       CPI Y/Y Q2 A 0.40% | C 0.50% | P 0.40%

GBP       Rightmove House Prices M/M Jul A -0.90% | P 0.80%

CAD       International Securities Transactions (CAD) May A 14.73B | C 15.39B | P 15.52B

USD       NAHB Housing Market Index Jul A 59 | C 60 | P 60

USD       Net Long-term TIC Flows May A 41.1B | P -79.6B | R -67.4B

Good Luck,

Andy

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