Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 106.147 | EURUSD 1.09764 | AUDUSD 0.74653 | NZDUSD 0.70007 | USDCAD 1.31299 | USDCHF 0.9871 | GBPUSD 1.31108 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.09790 | 1.09519

USDJPY                 106.729 | 106.080

GBPUSD               1.31455 | 1.31098

USDCHF               0.98945 | 0.98689

AUDUSD              0.74818 | 0.74559

USDCAD               1.31525 | 1.31206

NZDUSD               0.70152 | 0.69583

EURCHF                1.08459 | 1.08319

EURGBP               0.83651 | 0.83436

EURJPY                 116.968 | 116.362

For today

• EUR: The move through the Asian session eventually saw the market testing the downside again however, volumes were light and the market eventually pushed back off those lows to push to the opening levels, Topside offers light through to the 1.1020 areas and the market is likely to see stronger offers with fundamentals in Italy concerning the market, limited chatter on the subject of FX for the G20 meeting and did very little for the market, a move through the topside offers should see some weak stops appearing and the market open to the 1.1080 levels and stronger offers through the 1.1100 levels. Downside bids still likely to be substantial through to the 1.0900 areas and a push through 1.0880 levels is likely to see some weak stops with further bids likely into the 1.0860 areas however a push through this level is likely to see the market opening for a deeper move, and 2004 levels quickly surpassed.
• GBP: A very quiet session through the day with the market trading along the 1.3120 levels for the most part before recovering to the opening levels around 1.3140 as the market moved towards the London session, Topside offers likely through the 1.3200 areas and while they are likely to be light the market is likely to continue see light offers through to the 1.3280 areas before becoming stronger, weak stops likely through the 1.3300 areas however, with little data for the day movement could be limited. Downside bids through the 1.3100 levels likely to be a little stubborn before weak stops appear on a test through the level and 1.3050 areas likely to start to see some stronger bids.
• JPY: G20 failed to mention helicopter funding and only lightly touched on the possibility of JPY strength however, early arguments on the subject would likely see both sides evenly matched for the moment for more easing, however, the current circumstances seem to be backing the BoJ into a corner with safe haven flows affecting the ability of the MoF and BoJ to gain that 2% inflation target, The market rose through the early part of the session slowly testing through the 106.70 areas before drifting back to hold the 106.30 areas. Topside offers through the 107.20 areas before weak stops appear and the market opens to the 108.00 levels and weaker offers through that level, downside bids into the 106.00-105.80 areas and some limited congestion through the 105 handle with possibly stronger bids on a test to the 105.20 areas.
• AUD: A very quiet opening and a light rise through into the Tokyo session from the 0.7460 areas to test above the 0.7480 before dipping back to the lows just below the 0.7460 area and then ranging quietly through to the London session. Topside offers light through the 75 cent levels however, through the level the market sees stronger congestion likely to appear through to the 0.7560 levels with 76 cent possibly being a stretch to far, downside bids into the 0.7440 level and while tested previously on Friday the market is likely to find some weak stops and possibly larger stops moving in for a return through the 74 cent levels.

Overnight News                                                                  

SGD:

Singapore’s Central Bank Sees Headline CPI Turning Positive

Singapore’s MAS Says Current Monetary Policy Stance Appropriate

Singapore to Take Stronger Regulatory Actions After 1MDB Probes

Singapore June Consumer Prices -0.7% Y/y; Est. -1.1%

JPY/EUR:

Japan’s Second Largest Life Insurer Buys Spanish, Italian Bonds

JPY:

Japan’s Exports Decline Again in June, for Ninth Straight Month

Japan Keeps Economic Assessment, Cuts View on Business Sentiment

Japan’s Ishihara Says Yen Is Stabilizing, Economy Improving

CNY:

Chinese SOEs Picked by NDRC Sell 80% More U.S.-Dollar Debt in 2Q

AUD:

Australian Total FX Turnover Climbed by 6% in Six Months

Today’s data

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

JPY         Trade Balance (JPY) Jun A 0.33T | C 0.24T | P 0.27T | R 0.29T

08:00     EUR        German IFO – Business Climate Jul C 107.5 | P 108.7

08:00     EUR        German IFO – Current Assessment Jul C 114 | P 114.5

08:00     EUR        German IFO – Expectations Jul C 101.2 | P 103.1

10:00     GBP       CBI Trends Total Orders Jul C -6 | P -2

Weekend News

G20:

G-20 Pledges to Use All Tools to Fight Weak Global Recovery
G-20: Weidmann: G-20 Agreed World Economy to Continue to Recover
JPY:

Kuroda Says BOJ Will Monitor Risks and Add Stimulus If Needed
BOJ’s Kuroda Says G-20 Didn’t Discuss Helicopter Money at All
Aso Says He Told G-20 That Excessive FX Moves Are Harmful
Aso: Yen Stabilized After Gains Posted on U.K.’s Brexit Vote
USD/JPY:

Lew, Aso Discuss Need For All G-20 Countries to Promote Growth
JPY/SGD/MYR:

Japanese Group Eyes Singapore-Malaysia High-Speed Rail: Nikkei
CNY:

China Seeks to Stabilize Yuan vs Currency Basket: PBOC’s Chen
China to Further Improve Yuan Rate Mechanism, PBOC’s Zhou Says
PBOC Adviser Sees Downward Pressure on China Economy: Reuters
China’s Lou Says G-20 Should Intensify Policy Coordination
CNY/JPY:

China Urges Japan Not to Intervene in South China Sea Issue
USD/CNY:

China Has Capacity to Implement Hard Changes: Treasury Official
EUR/GBP/TRY:

Schaeuble: Brexit Harm Must Be Minimal; Turkey Worries Europe
EUR:

Merkel Vows to Protect Germans as Terrorism Ruled Out in Munich
Schaeuble: Not Worried About Italian Banking Sector
Schaeuble Says No Country Can Assure Tax Certainty on Its Own
EUR:

Greece Could Tap Bond Markets Next Summer, Tsakalotos Tells EfSy
USD/EUR:

Lew Says European Banks Should Continue Balance-Sheet Clean-Up
USD:

Lew Says Tax Policies Key To Fostering Growth, Investment
GBP:

Some U.K. Consumers Say Brexit Delaying Spending Decisions: Poll
Carney Says Financial System Dampened Brexit Aftershocks
GBP/AUD/INR:

Johnson Says U.K. Approached by Australia, India for Trade Deals
KRW/CNY:

S.Korea’s Yoo Says China Unlikely to Retaliate on Thaad: Yonhap
AUD:

Morrison Says Weaker Aussie ‘Has Been Advantageous for Us’
Morrison Says Fitch Reaffirms Australia AAA With Stable Outlook
SGD:

Singapore Hasn’t Cut Tax Rates to Thwart Indonesia’s Amnesty
ZAR:

South Africa Economy in ‘Low-Growth Trap,’ Kganyago Says
TRY:

Simsek Says Turkey Will Strongly Adhere to Democratic Principles
TRY/USD:

Turkey Should Reinforce Confidence in Government: Treasury’s Lew

Harry Hindsight

• EUR: The market held quietly through the day holding around the 1.1020-30 areas for the most part through into the London session, the range improved a little through into the London and made early highs through to the 1.1040 levels before eventually drifting lower again to the 1.1010 levels and holding through into the NYK session, the end of the session in London saw strong selling with the PMI numbers mixed but generally better than expected. However, the release of the Markit US manufacturing number so a better than expected number and the USD dropped quickly through to the 1.0950’s before finding support and holding to the close and finding some light profit taking to close towards the 1.0980 areas.
• GBP: Moving quietly through the Asian session the market tested to the 1.3250 levels before slipping back to the opening levels and holding the 1.3220 levels into the opening in London, mixed PMI numbers but generally better than expected from Europe did little for the market and Cable edged higher through to the UK numbers and disappointment rained on the parade with the PMI numbers coming in sharply lower and the Cable dropped from the pre-release highs around the 1.3290 level through 1.3200 before finding some support as it continued to drop to the 1.3100 areas testing into the NYK session along the 1.3080 areas before ranging around the 1.3100 level to the close.
• JPY: USDJPY as with the rest of the market traded in a narrow range through the day, moving in early trading to the 106.20 areas before drifting into the Tokyo session to test back to the 105.60 levels and make the lows for the day, The move through the London session saw the market holding quietly around the 105.80 areas before moving into the London session and starting a steady rise through the early part of London pushing to the 106.30 levels while the width of the range increased through the NYK session and the market pushed to the 106.40 areas the market was reasonably calm through to the close around the 106.20.
• AUD: With very little news through the Asian session the early highs into the Tokyo session saw the Oz test towards the 0.7510 areas before slipping back with carry trade selling moving into the market trading through to the late session in Asia to start a light recovery into the London opening, London were light sellers and the market struggled on the dip to the 0.7460 levels and moved quietly through into the NYK session ranging to the 0.7480 levels, NYK pushed at the bids and the market dipped into the 0.7440 levels before starting a steady but quiet rise to the close.

Friday’s premiership results

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

JPY         PMI Manufacturing Jul (P) A 49 | C 48.3 | P 48.1

EUR        France Manufacturing PMI Jul (P) A 48.6 | C 48.1 | P 48.3

EUR        France Services PMI Jul (P) A 50.3 | C 49.6 | P 49.9

EUR        Germany Manufacturing PMI Jul (P) A 53.7 | C 53.6 | P 54.5

EUR        Germany Services PMI Jul (P) A 54.6 | C 53.3 | P 53.7

EUR        Eurozone Manufacturing PMI Jul (P) A 51.9 | C 52.1 | P 52.8

EUR        Eurozone Services PMI Jul (P) A 52.7 | C 52.3 | P 52.8

GBP       Manufacturing PMI Jul (P) A 49.1 | C 50 | P 52.1

GBP       Services PMI July (P) A 47.4 | C 49.2 | P 52.3

CAD       Retail Sales M/M May A 0.20% | C 0.00% | P 0.90%

CAD       Retail Sales Less Autos M/M May A 0.90% | C 0.20% | P 1.30%

CAD       CPI M/M Jun A 0.20% | C 0.10% | P 0.40%

CAD       CPI Y/Y Jun A 1.50% | C 1.40% | P 1.50%

CAD       BoC CPI Core M/M Jun A 0.00% | C 0.00% | P 0.30%

CAD       BoC CPI Core Y/Y Jun A 2.10% | C 2.00% | P 2.10%

Stay lucky

Andy

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