Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 101.718 | EURUSD 1.11505 | AUDUSD 0.75552 | NZDUSD 0.73125 | USDCAD 1.31898 | USDCHF 0.97919 | GBPUSD 1.29858 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.11580 | 1.11265

USDJPY                 102.643 | 101.001

GBPUSD               1.30045 | 1.29465

USDCHF               0.98086 | 0.97838

AUDUSD              0.75637 | 0.75399

USDCAD               1.32043 | 1.31712

NZDUSD               0.73227 | 0.72860

EURCHF                1.09205 | 1.09035

EURGBP               0.85996 | 0.85774

EURJPY                 114.400 | 112.485

For Today

• EUR: The day of judgement with the FOMC later in the day to come, the market saw limited trading through the session with the market now either set or limited for the decision, trading from the opening around the 1.1150 area and basing on that level through to the late Tokyo session eventually testing lower through the session to the 1.1145 level until the BoJ announcement where the market dipped through into the 1.1120’s as EURJPY USD buying moved in, Topside offers likely to be thin on the ground and unlikely to stand up to any real pressure on a move in either direction, a test through the 1.1220 levels will likely see weak stops forcing the market into the congestive area around the 1.1250 area and larger offers on the approach to the 1.1300 level. Downside bids congested as with the topside and the market moving through the 1.1050 area is likely to see limited stops and a move below the stronger 1.1000 levels will possibly see stronger stops appearing as the market attempts the downside 1.0950 areas.
• GBP: Opening quietly the market drifted from the mid 1.2990’s down through the 1.2980’s, continuing worries about Brexit, and while the Europeans are talking strongly about what we are not going to be able to do, as they say the door swings both ways and an economy as large as the UK cannot be put out to pasture that easily without the door swinging back. Saying that having dipped to the 1.2980 areas the market bounced back quickly to the 1.3000 levels with EURGBP selling the main mover, once the EURGBP selling was over with though the market renewed its 1.2980 levels and the move into the BoJ announcement saw the market in Cable dropping back as the USD rallied, Topside offers through the 1.3000 areas are likely to be very weak and the move above the 1.3040-50 areas will possibly see weak stops and possible opening stops with light congestion expected around the 1.3100 areas but the topside fairly weak for a good distance, Downside bids through to the 1.2950 levels and while the day is about the FOMC bids through the 1.2900 areas are likely to be a little more formidable than the Brexit vote saying that a push through the 1.2850 areas will likely see stops appearing and a weak situation developing.
• JPY: So a quiet session from the opening trading around the 101.70 levels, some weak choppiness testing through into the 101.50 levels the market pushed back to the 101.80, the movement into the BoJ announcement became nervous dipping to the 101.20 levels then starting a steady rally to the 102.00 levels into the statement, initially the market reacted with a quick move to the 101.00 areas as the market viewed the announcement as positive with controls aimed at the yield cover however, once you cut through the tinkering it would seem to be smoke and mirrors and the market reacted bouncing off the 101 levels and quickly rising to the 102.40 areas and although slowing the market pushed to the 102.80 levels into the London session. Topside offers likely through the 103.00 areas however, the BoJ is now relying it would seem on the FOMC increasing rates a gamble it would seem or maybe not? A push through the 103.00 levels sees some light congestion around the 103.50 level and then a weak 104.00 level a possibility and stops above that level, Downside bids into the 101.00 levels and likely to be reasonably strong, however, a push through the level will likely see some panicky selling and the congestion to the 100 levels likely to soak up those bids and possible substantial bids.
• AUD: Moving through the session in a very narrow range saw the market moving around the 0.7550-60 levels into the BoJ statement and the market moved only slightly more, testing to the 0.7565 level and then dropping back to the 0.7535 area as the move higher of USDJPY squeezed the Oz lower and into those lows, Topside offers through the 0.7580-7600 areas with congestion through the level and continuing over the next big figure, whether these will stand up to a strong move higher remains to be seen however a move above the 77 cent level is likely a little stronger and the market having run its course will absorb some further moves, downside bids into the 75 cent levels are light and the market likely to see some weak stops on a push through the 0.7440 areas and the downside to the 72 cent levels becoming vulnerable on a strong USD move.

Overnight News

JPY:

BOJ Unveils New Framework for Policy: Statement Highlights

Japanese Exports Decline for an 11th Straight Month in August

Japan’s Big Banks Retreat Further From Government Bonds: Nikkei

CNY:

PBOC Denies Speculation It Intervened in Yuan and HIBOR Markets

China to Restructure Economy to Sustain Growth, Premier Li Says

CNY/USD:

China’s Li Confident in U.S. Ties No Matter Who Is Elected

EUR:

Praet Says ECB Will Retain Very High Degree of Monetary Support

NZD:

New Zealand Annual Immigration Rises to Fresh Record

AUD:

Australia’s Aug. Leading Index Unchanged M/m at 96.99

PHP/RUB:

Philippines, Russia Meet on Possible Military Equipment Purchase

Today’s data

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

JPY         BOJ Monetary Policy Statement

JPY         Trade Balance (JPY) Aug A 0.41T | C 0.50T | P 0.32T | R 0.34T

AUD       Westpac Leading Index M/M Aug A 0.00% | P 0.10%

08:30     GBP       Public Sector Net Borrowing (GBP) Aug C 10.5B | P -1.5B

12:30     CAD       Wholesale Sales M/M Jul C 0.30% | P 0.70%

14:30     USD       Crude Oil Inventories P -0.6M

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

21:00     NZD       RBNZ Rate Decision C 2.00% | P 2.00%

Harry Hindsight              

• EUR: Opening around the 1.1180 levels the market drifted in a tight range through the Asian session trading to the 1.1170 levels and generally remaining in that area through to the London session, quick buying of EURGBP from the London opening saw the Euro leap higher and quickly push through the 1.1200 level and touching towards the 1.1215 level before the buying slowed and the market for Euro then went in a steady drift through the balance of the session with the FOMC continuing to dominate the market falling back to the 1.1155 levels into the close.
• GBP: The Cable rose slightly from the opening to push through the 1.3040 levels and traded around the level through into the London session, EURGBP buying initially saw the Cable pulled with the Euro higher however, as the liquidity in Cable ran out the GBP started to weaken and triggered weak stops through the opening levels and dropped back quickly to the 1.3000 areas from the highs above the 1.3060 level, EU negotiations on UK banks seemed to be the main trigger for the fall, the support lasted for a couple of hours before the selling resumed and the market again dropped quickly into the 1.2950 areas where stronger bids eventually held the market and the run through the NYK session saw the market rise a little to finish close to the 1.2990 area.
• JPY: The USDJPY remained contained for the most part opening around the 101.90 levels and trading slowly into the Tokyo session to push through the 102.00 levels only never to reach the level again and trade steadily through into the London session testing the 101.50 areas, London were light and steady buyers through the early part of the session rising to above the opening level but drifting for the most part through to the close around the 101.70 area
• AUD: A very quiet session for the Oz with the RBA minutes doing very little for the market with a communique along similar lines to previous ones, pushing from the lows around the 0.7530 areas and testing above the 0.7550 quickly before trading quietly through the balance of the Asian session around the 0.7545, London took the market higher with early traders pushing through the 0.7565 levels before the early buyers thought better and the market dropped quickly back to the 0.7550 area, the market then traded around the level through to the close not able to push to far either side of the 0.7440-60 levels.

Yesterday’s premiership results

AUD       RBA Meeting Minutes

AUD       House Price Index QoQ Q2 A 2.00% | C 3.10% | P -0.20%

CHF        SECO Economic Forecasts

CHF        Trade Balance (CHF) Aug A 3.02B | C 3.27B | P 2.93B | R 2.81B

EUR        German PPI M/M Aug A -0.10% | C 0.00% | P 0.20%

EUR        German PPI Y/Y Aug A -1.60% | C -1.50% | P -2.00%

USD       Housing Starts Aug A 1.14M | C 1.19M | P 1.21M

USD       Building Permits Aug A 1.14M | C 1.17M | P 1.15M | R 1.14M

Good Luck,

Andy

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