Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 100.45 | EURUSD 1.12638 | AUDUSD 0.76133 | NZDUSD 0.73084 | USDCAD 1.29274 | USDCHF 0.96701 | GBPUSD 1.3232 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.12760 | 1.12593

USDJPY                 100.620 | 100.386

GBPUSD               1.32650 | 1.32188

AUDUSD              0.76320 | 0.76036

USDCHF               0.96770 | 0.96624

USDCAD               1.29371 | 1.29178

NZDUSD               0.73370 | 0.73066

EURGBP               0.85254 | 0.84996

EURJPY                 113.332 | 113.079

EURCHF                1.08988 | 1.08898

 

For Today

• EUR: Another day of quiet trading and did I mention the upcoming Fed rate announcement, well the market seems to be marking time until its release, with the Euro holding the 1.1260 in early trading to eventually move higher, somewhat, to hold around the 1.1270 levels to the London session, with only the IFO in Europe to stir the becalmed markets, topside offers light through the 1.1300 areas and possibly to the 1.1320 before weak stops however, it is likely that the offers will quickly soak up those stops and continue through to the 1.1360 areas with the NYK session seeing Durable goods and Jobless claims numbers likely to cause a stir if they are out of line, a push to the 1.1400 areas will see stronger stops appearing above the level. Downside bids into the 1.1240 levels with further bids likely into the 1.1200-20 areas being weak, a break through the 1.1180 areas is likely to see weak stops appearing and the chance of further declines and the market opening to the 1.1100 areas.
• GBP: Early buying in Tokyo saw the market moving off the opening 1.3230 levels and testing through to the 1.3260 levels before running out of steam and drifting back to the 1.3220-30 levels to hold into the London session, Topside offers through the 1.3270 levels and likely to continue through to the 1.3300 areas where stronger offers could be waiting, and congestion stretching back over a month above those levels, a push through the 1.3350 areas could open up another big figure but would very much depend on the US numbers. Downside bids limited with the 1.3150 areas likely to be lightly supported before opening to the stronger 1.3050 areas and weak stops on a move through the 1.3000 areas.
• JPY: Opening around the 100.40 areas the move into the Tokyo session saw some limited buying of the USDJPY and the market again pushed to the 100.60 areas before slipping away from those limited offers, however, the move lower was very limited and the range between 100.40-60 was really the best the market could do, with the market for the most part holding around the opening levels, Topside offers through the 100.60 levels are likely to continue into the 100.80 areas and possibly become stronger however, even a push through these levels sees the 101.50 level as a bone of contention and possibly key to any renewed strength for the day, a push through that level could see a small short squeeze and the market opening for another big figure before finding sufficient resistance to the move, downside bids increase on any move through the 100 levels with yield buyers likely to appear and the bids are likely to continue all the way down to the 99.00 areas with only limited chance of stops appearing.
• AUD: Another frustratingly slow day with the Oz opening around the 0.7610 areas and seeing a low just beyond the 0.7605 areas before rallying through the Tokyo session to the 0.7630 and holding there to the London opening, Topside offers, light through to the 0.7660 areas with the market likely to see small weak stops appearing on a push through the level and then further congestion through the 77 cent levels vulnerable during the NYK session, a break above the 0.7760 areas could produce large stops appearing and the market then open to test the 80 cent levels from last year however, it’s a large if. Downside bids likely to be weak through the 76 level with better bids moving in around the 0.7580 areas through to 0.7540 level before weak stops, and the market opens to larger losses on a beak of the 75 cent level with longs likely to be cutting.

Overnight News

JPY:

Japanese Bought Net 433.1 Billion Yen Overseas Debt Last Week

KRW/EUR:

1. Korean Cos. to Settle Trade with Iran in Euros from Aug. 29

KRW/JPY:

1. Korea, Japan Finance Ministers to Discuss Policy Cooperation

KRW/JPY:

S.Korea Says FX Swap Isn’t on Draft Agenda of Meeting with Japan

KRW/USD:

North Korea Says U.S. Mainland Now in Range of Its Missiles

AUD:

Australia’s Morrison Warns on Economy’s ‘Uncommon Predicament’

NZD:

Fonterra Lifts Milk Price Forecast as Global Glut Wanes

CNY:

China Will Maintain Differentiated RRR Policy: PBOC’s Chen

China PBOC Trying to Add Long Term Money to Market: MNI

China’s Fixed-Asset Investment May Rise About 9% in 2016: News

CNY/JPY:

China Says Sino-Japan Ties Face Difficulties and Opportunities

Today’s data

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

JPY         Corporate Service Price Y/Y Jul A 0.40% | C 0.10% | P 0.20%

08:00     EUR        German IFO – Business Climate Aug C 108.5 | P 108.3

08:00     EUR        German IFO – Current Assessment Aug C 114.9 | P 114.7

08:00     EUR        German IFO – Expectations Aug C 102.5 | P 102.2

10:00     GBP       CBI Retailing Reported Sales Aug C -5 | P -14

12:30     USD       Initial Jobless Claims (AUG 20) C 265K | P 262K

12:30     USD       Durable Goods Orders Jul (P) C 3.40% | P -3.90%

12:30     USD       Durables Ex Transportation Jul (P) C 0.20% | P -0.40%

14:30     USD       Natural Gas Storage C 19B | P 22B

 

Harry Hindsight              

• EUR: Limited trading through the Asian session saw the market slowly move through the 1.1300 levels having opened around the 1.1310 areas and unable to improve on that high by much, moving into the London session saw some light buying post German Q2 final number and the lack of movement above the 1.1300 areas saw the market quickly drop back to the 1.1280 areas holding through to the NYK session and then dipping again through to the 1.1260 levels, the market overall continued in the same vein as the Asian session with the market pretty much on hold until the rate announcement to come by the Fed, the market dipped again into the London close and held briefly around the 1.1245 levels before ranging above the 1.1260 level to the close in a narrow band.
• GBP: Cable attempted early to push on through the 1.3200 opening area however, for the time being the Asian market had not real appetite for the move and the Cable drifted through the session to trade around the 1.3180 levels into the London session, a quick dip from the opening saw the market test towards the 1.3160 levels however, with better interest appearing the move was short lived and the market quickly rose once the limited data was released trading quickly through to the 1.3200 levels and squeezing to 1.3220 taking our some light stops, the movement from there was a steady rise through to the NYK session testing the 1.3250 levels with the NYK option cut seeing gamma interest move through and the market peaking through the 1.3270 levels before reversing and trading back to the 1.3230 areas for a long quiet evening session to a close around the 1.3230 levels. EURGBP saw steady selling moving through the market with the Asian session pushing at the 0.8580 levels before moving steadily lower through the London session and testing to the 0.8490 area into the NYK session before holding around the 0.8510 levels to the close.
• JPY: USDJPY remains very limited with the market opening around the 100.25 areas and then trading higher into the Tokyo session to test above the 100.50 levels before dipping back to the opening levels with fixing supply, the market recovered a little and remained above the opening through to the London opening, dipping from the opening to again test towards the 100 level but failing to push through the 100.10 areas and holding into the NYK session, the move into NYK saw steady USD buying through the session and the USDJPY slowly pushed through the 100.50 areas and tested lightly above the 100.60 areas before holding to the close around the 100.45 levels in quiet trading.
• AUD: More or less in a similar situation as the USDJPY with the market on hold until the Fed announcement, the market opened around the 0.7615 areas and ranged through the day between 0.7590 lows into the London opening and then reversing and squeezing the limited shorts out as it pushed up to the 0.7630 levels in early trading in London, the market then held above the opening through into the NYK session before giving up what limited gains it had made to settle back to the 0.7610-15 areas for the close.

Yesterday’s premiership results

EUR        German GDP Q/Q Q2 (F) A 0.40% | C 0.30% | P 0.40%

GBP       BBA Mortgage Approvals Jul A 37.7K | C 38.5K | P 40.1K

USD       House Price Index M/M Jun A 0.20% | C 0.30% | P 0.20%

USD       Existing Home Sales Jul A 5.39M | C 5.55M | P 5.57M

USD       Crude Oil Inventories A 2.5M | C -0.5M | P -2.5M

Good Luck,

Andy

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