Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 102.019 | EURUSD 1.12564 | AUDUSD 0.76869 | NZDUSD 0.74153 | USDCAD 1.28439 | USDCHF 0.96959 | GBPUSD 1.34421 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.12581 | 1.12330

USDJPY                 102.095 | 101.197

GBPUSD               1.34440 | 1.34079

AUDUSD              0.76903 | 0.76526

USDCHF               0.97086 | 0.96861

USDCAD               1.28619 | 1.28370

NZDUSD               0.74368 | 0.73970

EURGBP               0.83947 | 0.83750

EURJPY                 114.903 | 113.816

EURCHF                1.09205 | 1.08996

 

For Today

• EUR: A quiet session just for a change through the Asian market with and early dip on EURJPY selling to the 1.1230’s before recovering to test to the opening levels in the mid 1.1250’s and holding above the level through into the London session, Topside offers from the 1.1280 levels dominate the market through to around the 1.1320 areas before the likelihood of stops appear however, even through this level there is likely to be congestive offers extending through to the 1.1360 areas before we approach stronger offers still into the 1.1400 level, downside bids light back through the 1.1200 areas with weak stops likely to appear on a break of the 1.1180 areas with stronger bids likely to start appearing through the 1.1160 areas and likely to increase to the 1.1140 level, for the moment German IP stands out for the day.
• GBP: Cable drifted throughout the session unable to capitalize on the move above the 1.3400 levels not seen since June, opening around the 1.3440 levels the market has gradually eased back to trade along the 1.3410 level into the move to London with little impetus and expectant of IP and MP numbers expected today both of which show expectations of a weaker number for the monthly figures through the summer months Topside offers through the 1.3450 levels are likely to quickly give way to stops and the market then likely to be lightly offered around the 1.3500 levels with only slightly stronger offers on any approach of the 1.3600 area. Downside bids light through the 1.3400 levels with possibly stronger bids around the 1.3350 levels and congestive bids through to 1.3300 a push through this level will likely see weak stops coming into play and a deeper move possible to a stronger 1.3200 area.
• JPY: The USDJPY held the 102.00 areas through to the Tokyo opening then dropped quickly differences appearing in the BoJ members on what is required to reach the governments targets, this set the JPY higher as the certainty of easing slowly disappears as it has so many times before and the USDJPY dropped quickly back into the 101.30 areas, test through the level eventually to 101.20 but never really recovering and holding through to the London session around the 101.40. Topside offers light through to the 102.20 areas however, possibility of weak stops on a push through the level and this could cause a small squeeze higher however, with just the beige book for the US this may be a stretch, Downside bids through the current levels with more congestion and stronger bids likely to appear on a push through the figure and these bids are likely to strengthen in size on any dips below the 100.50 areas and onwards.
• AUD: The Oz again dominated by cross plays more than anything else with the Oz attempting to push through the 0.7690 areas early in Tokyo as the USDJPY dropped back however, once the Oz failed the level the JPY buying was sufficient to set the lows in the Oz around the 0.7655 area and then drifting a little higher for the push into London holding above the 0.7670 areas. Offers into the 77 cent level are likely to extend through to the 0.7750-60 areas before any weaknesses appears, a push here is likely to see stops appearing on the move through the level and the market quickly pushing to the 78 cent levels however, this will open a challenge of the years highs and the possibility of further buying moving in. Downside bids light through to the 0.7550 areas with that strength likely to continue through to the 0.7480 areas before the market contemplates a short term reversal and an opening to the 74 cent level.

Overnight News

USD: Fed’s Williams Repeats Call for Gradual Hikes Sooner, Not Later

Williams: Global Factors Probably Behind Low Long-Term Yield

Williams: I’m Not Leaning toward Whether Sept. Is Off Or On

JPY: BOJ Struggles to Form Unified Opinion on Policy Review: Sankei

BOJ ‘Aiming Too High’ With 2% Goal: Opposition Leader Candidate

BOJ Won’t Expand Stimulus This Month, Former Executive Says

KRW/JPY: Park and Abe to Hold Summit to Discuss North Korea Provocation

AUD: Australian 2Q GDP Rose 0.5% Q/Q; Est. 0.6% Gain

Morrison: Attracting Investment Remains Significant Challenge

AUD: Australia’s Aug. Construction Index Falls 5 Pts M/m to 46.6

AUD/GBP/CNY:

U.K. Is Biggest Investor in Australia Farmland; China Holds O.4%

Today’s data

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

NZD       Manufacturing Activity Q2 A 2.20% | P -2.60% | R -2.00%

AUD       GDP Q/Q Q2 A 0.50% | C 0.40% | P 1.10%

JPY         Leading Index Jul (P) A 100 | C 98.6 | P 99.2

06:00     EUR        German Industrial Production M/M Jul C 0.10% | P 0.80%

07:00     CHF        Foreign Currency Reserves Aug P 615B

08:30     GBP       Industrial Production M/M Jul C -0.20% | P 0.10%

08:30     GBP       Industrial Production Y/Y Jul C 1.90% | P 1.60%

08:30     GBP       Manufacturing Production M/M Jul C -0.50% | P -0.30%

08:30     GBP       Manufacturing Production Y/Y Jul C 1.60% | P 0.90%

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

14:00     GBP       NIESR GDP Estimate Aug P 0.30%

14:00     CAD       Ivey PMI Aug C 56.3 | P 57

18:00     USD       Federal Reserve Beige Book

Harry Hindsight              

• EUR: A quiet session through the Asian session saw the market trading around the 1.1150 levels and the market held through to the London session, limited reaction to the Eurozone retail numbers saw the market edge up to the 1.1170 levels and again holding quietly through to the NYK session, the unexpected dip in Labour market conditions in the US saw the USD drop quickly and the Euro quickly rose to the 1.1250 levels, this led to a short period of choppiness in the aftermath before settling into to trade to the 1.1260 levels and holding around the 1.1250 level to the close.
• GBP: Cable was a little more determined with a quiet and steady rise through the Asian session pushing from the lows around the 1.3300 level to test through the 1.3320 areas into the London opening and pushing to the 1.3350 level in the first hour or so however, the market held around the level for the run to the NYK session with little movement in the market, the weak Labour market conditions number saw the Cable quickly through the level triggering weak stops along the way and the market breaking quickly through the 1.3400 level and into congestive offers too the 1.3450 levels before holding just off the highs to the close.
• JPY: Continued talk of further easing and such had little impact on the market with the opening around the 103.40 levels seeing a steady rise through the session to test the 103.80 level before dropping back quickly as the market started to discount rumours and comments as being the same run of the mill commentary seen several times this year, even so the move back to the opening levels through to the London session was limited and the market moved through to the NYK session holding the 103.20 levels, the US numbers saw the market quickly dive lower, while stops were triggered I’d be surprised if the results impressed much as the market quickly disappeared to the 102.20 levels before finding light support holding through to the close as the market pushed lower to test the 102.00 areas into the close.
• AUD: Strength in JPY and then weakness in the USD was sufficient to drive the Oz higher through the day with no change for interest rates the commentary was little changed from previous saw the market ease higher through from the opening 0.7580 levels and test to the 0.7630 areas before the announcement, once released the expectations of the market had been met and for once there was no major fluctuations and the market held through to the London session with London eager to test the topside and pushing through to the 0.7650 areas before drifting through to the NYK session pushing to 0.7620, the numbers in the US saw the market quickly rise to the previous highs, and push slowly through to the 0.7680 levels and stronger offers holding the market below 0.7690 through to the close.

Yesterday’s premiership results

GBP       BRC Sales Monitor Y/Y Aug A -0.90% | P 1.10%

AUD       Current Account Balance (AUD) Q2 A -15.5B | C -20.2B | P -20.8B | R -14.9B

AUD       RBA Rate Decision A 1.50% | C 1.50% | P 1.50%

CHF        GDP Q/Q Q2 A 0.60% | C 0.20% | P 0.10%

EUR        German Factory Orders M/M Jul A 0.20% | C 0.50% | P -0.40% | R -0.30%

CHF        CPI M/M Aug A -0.10% | C -0.10% | P -0.40%

CHF        CPI Y/Y Aug A -0.10% | C -0.10% | P -0.20%

EUR        Eurozone Retail PMI Aug A 51 | P 48.9

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

USD       Labour Market Conditions Index Change Aug A -0.7 | P 1 | R 1.3

USD       ISM Non-Manufacturing Composite Aug A 51.4 | C 55.5 | P 55.5

Good Luck,

Andy

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