Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 104.638 | EURUSD 1.09859 | AUDUSD 0.75021 | NZDUSD 0.70396 | USDCAD 1.31864 | USDCHF 0.99251 | GBPUSD 1.31308 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.10023 | 1.09812

USDJPY                 106.549 | 104.648

GBPUSD               1.31624 | 1.31064

AUDUSD              0.75678 | 0.74577

USDCHF               0.99304 | 0.99101

USDCAD               1.31950 | 1.31691

NZDUSD               0.70747 | 0.70041

EURGBP               0.83844 | 0.83502

EURJPY                 117.135 | 114.939

EURCHF                1.09080 | 1.08981

 

For Today

• EUR: The day started as it normally does for an FOMC day with the market holding around the opening levels just below the 1.0990 areas and ranging a little lower to the 1.0980’s before testing quietly higher once the Japanese stimulus package was released, EURJPY buying saw the Euro gradually pushing to above the 1.1000 in tentative trading and holding the level into the grey hour. Topside offer through to the 1.1030 levels, then possibly weak stops on a test above with light offers into the 1.1060 areas and becoming stronger through to the 1.1080-1.1100 levels, then congestion continues through that level with nothing particularly strong but likely to be continuous over the next big figure. Downside bids light through to the 1.0950 levels with the bids beginning to increase the deeper the market goes, a push through the 1.0880 level is likely to open the downside and the 1.0860 levels likely to be limited defence for the downside and opening the market to a deeper move.
• GBP: Early trading saw the Tokyo market buying steadily through to the 1.3160 levels, GBPJPY profit taking saw Cable pushed lower through the session to the 1.3110 levels before recovering to the opening 1.3130 levels as the market moved back through into the grey hour. Topside offers into the 1.3180 levels and through 1.3200 likely to be weak with light stops through the level and congestion likely to continue on any move higher, 1.3300 levels see limited resistance on a strong move and the market then opening to test further with limited interest for a good way. Downside bids through to the 1.3050 areas where the market has struggled over the past couple of weeks and a move through the level is likely to open up a quick move through the 1.3000 levels and the market moving back to hold around the 1.2950 areas.
• JPY: opening around the 104.60 areas the market moved steadily into the Tokyo session pushing steadily through into Tokyo rising to the 105.20 areas before the release of the Stimulus Package, the market quickly tested higher with strong buying and weak stops triggered on a move through to the 106.50 areas before rejecting the level and little in the way of a follow through, so dropping back almost as quickly to the 105.20 areas before holding quietly on a move into the London session. The stimulus package of 27T Yen requires however the market moved lower with the speech by Abe failing to mention the package and rumours of a 50yr bond issue quickly quashed by the MoF. Topside offers through the 106.80 areas with those offers likely to continue through onto the 107.20-50 areas, with the market likely to open to a quick test higher if the details are released and the FOMC meeting is different to the expected no change. Downside bids light through the 105.00 levels with some light bids not really appearing until the move to the 104.20 areas, however, at this point the release of news on the stimulus package will likely to be bad and the market will be in full flight and very little to hold the market until a move towards 103.20-00 areas.
• AUD: Early trading saw the market rise slowly off the opening 0.7500 levels and testing to the 0.7520 into the CPI release, in line with expectations for the quarter the market rose quickly higher to test above the 0.7560 levels with strong AUDJPY buying moving in however, with the weakness of the Yen and the USDJPY rising strongly after the announcement of 27T Yen package the Oz quickly dropped back to test the 0.7460 levels for a reasonable range on the day, Topside offers through the 0.7570 areas and likely to continue to the 0.7600 level before weak stops and the market opens to test into the 0.7650 areas and better offers, Downside bids through the 0.7460 levels and likely to continue until the market breaks the 0.7440 levels and weak stops appear for a test lower and the better bids into the 0.7350 areas.

Overnight News

JPY:

Japan PM Abe says stimulus package sized over 28 trln yen -Jiji

Japan considering issuing 50-year bonds for first time WSJ

Japan Not Considering 50-Year Bond, MOF Official Says

Japan Considers Cash Stimulus for Low Earners: Nikkei

Japan to raise minimum wage by 3 pct to ignite consumer spending

Mitsubishi UFJ, SMFG 1Q Net Profits Seen Down 30%, Nikkei Says

AUD:

Australian 2Q Trimmed Mean CPI Rises 0.5% Q/Q; Est. 0.4% Gain

USD:

Clinton Formally Nominated by Democrats in Historic First

CNY:

PBOC Academic Proposes Capital Flow Management for Yuan: News

China’s June Industrial Companies’ Profit Rises 5.1% Y/y

Westpac-MNI China July Consumer Sentiment -1.6% M/m to 114

NZD:

N.Z. Farmers Less Pessimistic About Economic Outlook: Survey

Today’s data

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

AUD       CPI Q/Q Q2 A 0.40% | C 0.40% | P -0.20%

AUD       CPI Y/Y Q2 A 1.00% | C 1.10% | P 1.30%

AUD       CPI RBA Trimmed Mean Q/Q Q2 A 0.50% | C 0.40% | P 0.20%

AUD       CPI RBA Trimmed Mean Y/Y Q2 A 1.70% | C 1.50% | P 1.70%

AUD       CPI RBA Weighted Median Q/Q Q2 A 0.40% | C 0.40% | P 0.10%

AUD       CPI RBA Weighted Median Y/Y Q2 A 1.30% | C 1.30% | P 1.30%

06:00     EUR        German GfK Consumer Sentiment Aug C 9.9 | P 10.1

06:00     CHF        UBS Consumption Indicator Jun P 1.35

08:00     EUR        Eurozone M3 Y/Y Jun C 5.00% | P 4.90%

08:30     GBP       GDP Q/Q Q2 (A) C 0.50% | P 0.40%

08:30     GBP       Index of Services 3M/3M May C 0.30% | P 0.50%

10:00     GBP       CBI Retailing Reported Sales Jul C 2 | P 4

12:30     USD       Durable Goods Orders Jun (P) C -0.40% | P -2.30%

12:30     USD       Durables Ex Transportation Jun (P) C 0.30% | P -0.30%

14:00     USD       Pending Home Sales M/M Jun C 1.90% | P -3.70%

14:30     USD       Crude Oil Inventories P -2.3M

18:00     USD       FOMC Rate Decision C 0.50% | P 0.50%

 

Harry Hindsight              

• EUR: The early part of the Asian session saw very little movement with the market slipping slightly from the opening around the 1.0990 levels to test towards the 1.0980 levels however generally it held around the opening level until USD selling moved in late into the session, with concerns about the coming FOMC rate decision and the BoJ’s stimulus package, with the Euro rising quickly to the 1.1000 levels and triggering light stops through the level to top at the 1.1020 areas and the move into the London session fully, London drifted a little with little data or news to go on testing back to the 1.1000 levels before running higher for a second time, with renewed EURGBP buying going through however, although the high was extended the market was unable to push to far beyond the 1.1030 levels and most stops already cleared the market started to drift back to the opening levels as it moved into the NYK session trading back steadily to trade the 1.0980 levels into the close.
• GBP: Cable opened around the 1.3140 levels moving quietly initially until out going MPC Weale made dovish comments and this from a stark hawk, the market dropped quickly into the Tokyo session testing through the 1.3100 levels before bouncing off the 1.3090 levels and heading back towards the 1.3120 through the balance of the session, London were quick sellers before the session got underway fully and the market dipped to the 1.3060 areas to make the lows before holding for a short period around the 1.3080 areas and the release of Mortgage approvals which was within the range of expectations and Cable bounced back to the opening levels from the lows, the market then continued to hold around those levels into the NYK session with some movement around the US consumer confidence numbers to test towards the 1.3180 levels before again holding around the opening levels to the close.
• JPY: The USDJPY opened quietly and then started a steady slide lower as the USD saw weakness generally across the board with the USDJPY dropping back to the 105.00 levels with little interference the move through the level saw some minor support moving in and the market moved slowly around the level for a few hours before dipping to the 104.40 levels as the Lunch period moved in, the move into the London session saw the market slowly slip to the 104.00 levels but unable to push through the level and slowly move back to the 104.40 and a long period of little movement into the NYK session, Consumer confidence saw the market push back to the 104.80 areas but the market struggled to push to the 105.00 levels and eventually slipped back to trade around the 104.60 to the close.
• AUD: After several hours of trading around the 0.7470 opening levels the market saw USD weakness appear and the Oz was quickly released to test to the resistance areas around the 0.7530 levels, and with further offers through the 0.7540-60 levels was unable to make too much headway as it moved into the London session saw the pattern continue and only as the market moved deeper into the NYK session did the market start to drift and the market drifted back to the 0.7500 levels in quiet trading.

Yesterday’s premiership results

NZD       Trade Balance (NZD) Jun A 127M | C 128M | P 358M | R 348M

JPY         Corporate Service Price Y/Y Jun A 0.20% | C 0.10% | P 0.20%

GBP       BBA Mortgage Approvals Jun A 40.1K | C 40.2K | P 42.2K | R 41.8K

USD       S&P/Case-Shiller Composite-20 Y/Y May A 5.20% | C 5.60% | P 5.40%

USD       Consumer Confidence Jul A 97.3 | C 95 | P 98 | R 97.4

USD       New Home Sales Jun A 592K | C 554K | P 551K | R 572K

Good Luck,

Andy

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