Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 111.995 | EURUSD 1.1948 | AUDUSD 0.79628 | NZDUSD 0.73375 | USDCAD 123373 | USDCHF 0.96946 | GBPUSD 1.34987 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.19365 | 1.19186

USDJPY                 112.531 | 112.164

GBPUSD               1.35410 | 1.34986

AUDUSD              0.79735 | 0.79496

USDCHF               0.97145 | 0.97003

USDCAD               1.23500 | 1.23285

NZDUSD               0.73142 | 0.72519

EURGBP               0.88312 | 0.88125

EURCHF                1.15908 | 1.15718

EURJPY                 134.252 | 133.802

For today

• EUR: With the German election showing increasing voter dissension Merkels 4^th term will likely require a stronger coalition with talks not likely to be concluded this year, Euro moved off the opening 1.1900 areas the market moved into the Tokyo session holding just above the 1.1920 areas and some weak EURJPY buying helped the Euro to push beyond the 1.1930 however, the market held around that level through to the 1.1935 areas to the grey hour. Topside offers remain into the 1.2000 areas with likely stops on a move through the level and limited offers through the 1.2040-60 areas before increasing into the 1.2080-1.2100 areas, strong stops on a push through the level would likely see the market testing quickly through to the 1.2140 levels and sentimental offers. Downside bids light back through the 1.1900 areas with weak stops on a push through the 1.1880 areas opening up a deeper move to the 1.1800-20 level and stronger bids likely in depth.
• GBP: Opening a little lower the market moved through to the 1.3520 areas before the Tokyo session began and then moved off the 1.3500 areas from the Tokyo opening to push through to the 1.3530 areas to hold quietly through the balance of the day, topside offers likely to have increased into the 1.3600 areas however, with the market talking of less shorts in the market now the market seems focused on a move higher with BoE interest rate rise conversations ongoing attracting attention, a push through the 1.3600 areas is likely to see limited offers this time around and the market opening to the 1.3650 areas with possible offers appearing but still likely to be limited to profit taking. Downside bids light through the 1.3500 areas with bids likely to appear on any test to the 1.3450 areas with weak stops through the level however, buyers are likely to continue to appear with BoE chatter.
• JPY: The USDJPY moved from the 112.20 areas quickly setting the low around the 112.15 areas to push into the Tokyo session testing weakly to the 112.40 areas before holding quietly until the fix and testing through to the 112.50 areas to hold for a couple of hours in the area before drifting back through to the grey hour testing back to the opening level. Light congestion on a move through the 112.00 areas, with light stops on a move through the 111.80 areas and further bids on a move through the 111.70 area and possibly moving into the 111.50 areas, a break through the level will see some weakness into the stronger bids around the 111.00 level and through to the 110.50 area, Topside offers through the 112.50 with weak stops through the level and opening the market for a test to a stronger offering area into the 112.80-113.00 areas, strong stops likely on a push through the level and the market open to further gains to the 113.80 areas.
• AUD: Opening unchanged the market dipped to the 0.7950 areas and then held through into the Tokyo session before pushing a little higher to set the high around the 0.7975 areas before drifting back through to test the lows again, the market eventually into the mid-range areas to hold to the grey hour. Topside offers light through the 0.7980 areas with the possibility of only limited stops on a move through into the 80 cent areas, offers likely to continue through to the 0.8050 areas and only a strong break here will open the topside with 0.8100-15 likely to have stronger offers with stops on a move through to open a stronger gain. Downside bids through the 0.79 cent level likely to be limited and a push through the 0.7880 areas is likely opening the market to the 0.7775-0.7840 range.

Overnight News

JPY:

Japan public favours PM Abe’s LDP in next election: Nikkei poll

USD:

FED inflation gauge released: 1% higher than core inflation read in Aug

KRW:

1. Korea stages anti-US rally in battle with Trump

RUB/USD/KRW:

1. Korea’s A bomb is deterring US first strike, say Russians

Today’s data

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

JPY         PMI Manufacturing Sep (P) A 52.6 | C 53.4 | P 52.2

08:00     EUR        German IFO – Business Climate Sep C 116 | P 115.9

08:00     EUR        German IFO – Expectations Sep C 108 | P 107.9

08:00     EUR        German IFO – Current Assessment Sep C 124.7 | P 124.6

13:00     CNY        Conference Board Leading Index Aug P 0.90%

Weekend News

NZD:

National hit 44% and have a minority government with 15% of the vote to be counted still

Kiwi to lose its wings after election

USD:

Trump is said to get tax plan that targets 20% corporate rate

USD/KRW:

Tensions rise as US warplanes skirt N. Korean coast, Pyongyangs envoy sharpens threats

EUR:

Merkel Chastised as far right surge taints fourth term victory

Merkel asked about possibility of minority government says intends to build a stable government for Germany

SPD Schulz says Britain’s May is gambling in Brexit negotiations to strengthen domestic position

Schulz says we should not cede more ground to Britain in negotiations

Merkel says if country fulfils criteria for Euro membership, we will see more members joining single currency

Merkel when asked whether there will be a stable government before Christmas, says I am always confident.

Der Spiegel: Merkel, the AfD and a wounded SPD

GBP:

Moody’s agency downgraded Britain’s credit rating after May’s speech

CNY:

China’s war on pollution to hit iron ore demand

Harry Hindsight

• EUR: A quiet move through the Asian session pushing through the 1.1950 levels from the opening around 1.1940 and struggling through to the grey hour around the 1.1960 areas. PMI numbers should improvement first in France and then Germany helping the Euro to push through to the 1.1970 areas and the final number for the Eurozone saw the market gap higher and up to the 1.2000 levels holding around the level through to the NYK session with early sellers forcing the market back to the 1.1970 areas and a quiet range through to the end of London around that level, the market eventually broke down through the 1.1960 level and the market then held the 1.1940-50 areas through to the close.
• GBP: The day opened full of optimism moving around the 1.3580 areas and holding through the London session in that area, early London took the market to the highs just below the 1.3600 areas and then dropped the market back to slowly drift to the 1.3550 areas into the NYK session and the speech by May, when the speech came the market suddenly found the optimism quickly disappear with a lacklustre speech and very little on specifics whether intentional or not the consequences for the day left the market trading around the 1.3500 areas and only bouncing to the 1.3530 areas when the next bombshell hit the market with Moody’s downgrading to AA2 and stable outlook, whether this little bit was planned or a direct result of the speech left the market testing to the 1.3450 areas before recovering to finish around the 1.3500 level.
• JPY: Opening around the 112.50 areas the market slipped a little before heading into the Tokyo session pushing through to the 112.55 areas, N. Korean rhetoric and a statement about detonating an explosion in the Pacific saw the USDJPY drop quickly to the 112.00 areas bouncing a little before a second run took the market to the 111.65 areas into mid-session in Tokyo, the market then started a slow climb through to the grey hour pushing back through the 111.80 areas before testing back to the 112.00 areas into the London session, the market continued to range around the 112.00 levels through to the close with the market testing back to the 111.85 areas and unable to push much beyond the 112.15 areas.
• AUD: Opening around the 0.7930 areas the market moved into the Tokyo session holding the level and then testing lower with the N. Korean comment on exploding a device in the Pacific, the dip was minor and took the market just through the 0.7905 areas before recovering for the move into the grey hour holding the 0.7925 level, London were quick buyers taking the market back to the 0.7950 areas and the market pushed through to mid-morning holding around that level, another push through to the 0.7970 level saw the market holding around the level until the NYK option cut testing through to the 0.7985 areas before drifting back to the 0.7960 areas into the close.

 

Yesterday’s premiership results

EUR        France Manufacturing PMI Sep (P) A 56 | C 55.5 | P 55.8

EUR        France Services PMI Sep (P) A 57.1 | C 54.8 | P 54.9

EUR        Germany Manufacturing PMI Sep (P) A 60.6 | C 59 | P 59.3

EUR        Germany Services PMI Sep (P) A 55.6 | C 53.8 | P 53.5

EUR        Eurozone Manufacturing PMI Sep (P) A 58.2 | C 57.2 | P 57.4

EUR        Eurozone Services PMI Sep (P) A 55.6 | C 54.8 | P 54.7

GBP       CBI Trends Total Orders Sep A 7 | C 13 | P 13

CAD       CPI M/M Aug A 0.10% | C 0.20% | P 0.00%

CAD       CPI Y/Y Aug A 1.40% | C 1.50% | P 1.20%

CAD       CPI Core – Common Y/Y Aug A 1.50% | P 1.40%

CAD       CPI Core – Trim Y/Y Aug A 1.40% | P 1.30%

CAD       CPI Core – Median Y/Y Aug A 1.70% | P 1.70%

CAD       Retail Sales M/M Jul A 0.40% | C 0.30% | P 0.10%

CAD       Retail Sales Less Autos M/M Jul A 0.20% | C 0.50% | P 0.70% | R 0.40%

USD       US Manufacturing PMI Sep (P) A 53 | C 53 | P 52.8

USD       US Services PMI Sep (P) A 55.1 | C 55.9 | P 56

Stay lucky

Andy

Any opinions, news, research, analyses, prices or other information contained on this Blog, whether by LMAX, its employees, partners or contributors, does not constitute investment advice nor has it been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the material contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Whilst information provided on this Blog may help with your investment research you must consider carefully whether you should make (or refrain from making) investment or other decisions based on what you see without doing further research on the investments you are interested in. Participating in this Blog cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you. LMAX has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the material produced in this Blog was obtained from sources deemed to be reliable, LMAX does not provide any guarantees about the reliability of such sources.

Consequently any person acting on it does so entirely at his or her own risk.

If you currently hold an account with LMAX for the purposes of trading FX and CFD’s, you are encouraged to use a different Username and Password to access the Blog or any other online systems. The Blog is a place to learn, discuss and share information and ideas with Blog followers. It is not a place to slander, use unacceptable language or to promote LMAX or any other FX, Spread Betting and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.