Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 109.254 | EURUSD 1.19787 | AUDUSD 0.79636 | NZDUSD 0.72594 | USDCAD 1.25071 | USDCHF 0.95532 | GBPUSD 1.29332 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.19860 | 1.19557

USDJPY                 108.944 | 108.335

GBPUSD               1.29377 | 1.2921

USDCHF               0.95352 | 0.94993

AUDUSD              0.79390 | 0.79054

USDCAD               1.25346 | 1.25039

NZDUSD               0.72553 | 0.72211

EURCHF                1.14076 | 1.13733

EURGBP               0.92691 | 0.9250

EURJPY                 130.330 | 129.67

For today

• EUR: The big news of the day so far has been the firing of a N. Korean missile crossing over the North Island of Japan, warnings were given to local populace however, it fell into the Pacific some distance of the East coast. The Euro fell back from the early highs just above the 1.1985 areas to move into the Tokyo session dipping back to the 1.1955 levels, the market held the area and then traded through the session around the 1.1970 area to the grey hour. Technically the market looks set for a rise through to the 1.2400 areas however, before that point topside offers and possible barriers into the strongly sentimental 1.2000 areas with likely stops through the 1.2020 area and then the market likely to be weaker through to the 1.22 handle over time. Downside bids light through the 1.1950 level with possible stronger bids into the 1.1900-1.1880 areas, through the level weak stops are likely to be joined by others as the market opens quickly to the 1.1800 areas and the potential for a greater dip back as concerns over exports from the Eurozone kick in.
• GBP: Opening a touch higher the market dipped initially through the 1.2925 levels before slowly rising through the session to test through the 1.2940 in the later part of the session and holding the level through to the grey hour. Topside offers through the 1.2950 areas with congestion through to the 1.3000 then increasing in size as the market pushes through the 1.3050 levels. Downside bids light back through the 1.2900 area with limited congestion through to the stronger 1.2850 areas however, even here there is likely to be some limitation to news such as the usual rhetoric from the EU negotiating team that still remains persistent on exacting a large payment before trade negotiations start or in fact any type of useful negotiations to halt the uncertainty however, the fact the Labour party has now decided to come off the fence will likely stir proportions of the electorate that voted to remain..
• JPY: USDJPY opened a little lower and dropped quickly lower as the market was impacted by the N. Korean missile quickly moving to the 108.30 levels before bouncing as the news the missile fell into the Pacific performing for a change as expected we imagine, or hope. The market then ranged around the 108.80 areas in a decreasing range to the grey hour. USDJPY bids into the 108.30-00 areas with weak stops likely on a push through the level and some stronger bids likely into the 107.50 areas. Topside offers light through the 109.00 level with possible weak stops on a move through the level and the market quickly regaining the 109.30 areas, congestive offers again through the 109.80 areas and into the 110.00 area with some further weak stops on a test through the 110.20 level before running into stronger offers through the 110.40 areas.
• AUD: The Oz opened around the 0.7970 areas and immediately dropped lower trading in the first hour to the 0.7905 areas before starting a slow rise through to the 0.7935 level with the immediate concerns over with the market then drifted through to the grey hour holding the 0.7925 areas. Topside offers into the 0.7980-0.8000 level are likely to be reasonably strong however, a push through to the 0.8060 will likely see the 81 cent level tested quickly with possibly stronger sentimental sellers waiting, Downside bids light back through 79 cent areas with weak stops on a push down through the 0.7880 level before the stronger 0.7860-40 area kicks in with possible further stops just below.
• General:

Equities across the Asian reason reacted as you’d expect with red across the board, Gold opened quickly higher and pushed some $10 higher before holding some $6 above the close through the session.

 

Overnight News                                                                  

KRW:

1. Korea have fired a missile toward Northern Japan NHK
2. Korea Air Force fighter jets dropped bombs on firing drill grounds as show of force

JPY:

Japanese Govt. warns N. Korea missile headed toward N. Japan NHK

Warns people in N. Japan to take precautions

Missile passes over Japan NHK

1. Korea issue seems to be entering new step which may strengthen JPY going forward

Chief Cabinet Secretary Suga:

Lodged protest in strongest possible terms to N. Korea

Continue to cooperate with US, S. Korea over threat from N. Korea

Repeats Japan regards highly US’s stance that all options on table when it comes to N. Korea

Will work with countries like Russia and China to exert pressure on N. Korea

Agreed with US, S. Korea recently that talks over N. Korea are not simply for the sake of talking

Missile fell in Pacific around 0612 JST

Abe: agreed to increase pressure on N. Korea

Abe: Complete agreement with US to increase pressure on N. Korea

Abe: spoke to Trump about 40 minutes on N. Korea

USD/KRW:

1. Korea, US chairmen of Joint Chiefs of Staff in phone call agree to take strong response including military measures against N. Korea

EUR:

ECB fines Permanent TSB over breaches of liquidity requirements

USD:

US goods trade deficit widens in July, retail inventories fall

Trump hints at NAFTA withdrawal, says Mexico will pay for wall

Houston races to rescue flood victims before storms return

US security adviser McMaster tells S. Korea counterpart US commitment to S. Koreas defence in unwavering

Secretary of State Tillerson, S. Korea agree to discuss tougher sanctions against N. Korea

US military considering deploying strategic military assets to Korean peninsula

UN:

Is said to be convening emergency meeting of the Security Council

SGD:

Singapore home sales surge even as foreign demand stays subdued

Today’s data

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

JPY         Unemployment Rate Jul A 2.80% | C 2.80% | P 2.80%

JPY         Household Spending Y/Y Jul A -0.20% | C 0.70% | P 2.30%

06:00     GBP       Nationwide House Prices M/M Aug C 0.00% | P 0.30%

06:00     EUR        German GfK Consumer Confidence Sep C 10.8 | P 10.8

06:45     EUR        French GDP Q/Q Q2 (P) C 0.50% | P 0.50%

12:30     CAD       Industrial Product Price M/M Jul C -0.50% | P -1.00%

12:30     CAD       Raw Materials Price Index M/M Jul C -0.30% | P -3.70%

13:00     USD       S&P/Case-Shiller Composite-20 Y/Y Jun C 5.60% | P 5.69%

14:00     USD       Consumer Confidence Aug C 120.4 | P 121.1

Harry Hindsight

• EUR: A steady start with the Euro opening a little higher just under the 1.1950 areas before testing through to the 1.1960 areas in early Tokyo however, once the initial follow through from Jackson Hole the market slipped steadily back to fill the gap on the charts and holding the 1.1920 areas through to the London bank holiday session, the move through to the NYK session saw a quiet range holding the 1.1920-40 before slowly breaking higher through to the end of the of London pushing to the 1.1980 areas and a quiet run to the close.
• GBP: Cable had a strong start to the day with the market opening around the 1.2915 levels and slipping slowly lower through the Asian session testing to the 1.2875 levels and filling the gap on the charts, the move into London saw the market recovering with a long drawn out move back to the highs as with the Euro the market started rising again as the market pushed through the close in London however, with little volume the market went unchecked until the 1.2940 areas before finding sufficient interest to curb the market and running out just off the highs.
• JPY: USDJPY was particularly quiet initially opening slight lower and trading slowly higher to fill the gap, the move into Tokyo took the market from the 109.40 areas and then traded around the 109.10 areas through deep into the day, the market attempted the highs a few times but was contained each time.
• AUD: Limited day for the Oz as with the USDJPY with the market ranging between the 0.7925-50 levels through until late in the session with the market eventually pushing through the topside once the London session finished and making its way to the 0.7970 areas before drifting to a close.

Yesterday’s premiership results

EUR        Eurozone M3 Y/Y Jul A 4.50% | C 4.90% | P 5.00%

USD       Wholesale Inventories Jul (P) A 0.40% | C 0.30% | P 0.70%

USD       Advance Goods Trade Balance Jul A -65.1B | C -64.5B | P -64.0B

Good Luck,

Andy

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