Daily FX Market Commentary

Good morning,

LMAX Close

USDJPY 111.086 | EURUSD 1.15274 | AUDUSD 0.7374 | NZDUSD 0.66216 | USDCAD 1.30498 | USDCHF 0.99365 | GBPUSD 1.28243 |

LMAX Highs and Lows 5.15am GMT

                                High | Low

EURUSD               1.15365 | 1.1490

USDJPY                 111.171 | 110.679

GBPUSD               1.28368 | 1.28165

USDCHF               0.99470 | 0.99322

AUDUSD              0.73787 | 0.7345

USDCAD               1.30639 | 1.30446

NZDUSD               0.66186 | 0.65934

EURCHF                1.14605 | 1.14291

EURGBP               0.89902 | 0.89646

EURJPY                 128.111 | 127.342

For today

• GBP: A reasonably quiet session with the Cable eventually lifting above the opening levels after a test of the 1.2820 level then pushing to the 1.2835 area and holding quietly in the area before drifting on the move towards the grey hour, A new day and a new year low? Bids into the 1.2800 level likely to slow the market however, stronger bids likely on any push for the 1.2770 areas with an old trend line likely to provide some support from the top of the 2016-2017 ranges, a push through the level is likely to see some stronger stops in the area and the next big figure of 1.26 exposed for next week, topside offers likely to be limited through to the 1.2900 areas with some weak congestion through the level with stronger offers likely into the 1.30000 areas, and a mixture above the level.
• EUR: Early selling tested to the 1.1515 area and then saw the market rising to the 1.1535 level before the market reacted to the story on EU banks exposed to Turkish banks and the market again fell from the 1.1535 level, with grey hour selling as the story spreads to early European players crashing through the 1.1480 level triggering stops with stronger bids likely into the 1.1400 areas likely to be a little suspect given the reaction to the news, a push through the level is likely to see stronger congestion and limited profit taking but momentum is key to any further losses with the market reaching into the top of ranges from 2015/16. Topside offers light through the 1.1540-60 areas with possible late comers in the area, a push through could see weak stops appearing and the market possibly open to a short squeeze to the 1.1600 area and stronger offers.

• JPY: Limited movement and the USD like the Euro suffered from connections to the current spat with between the US and Turkey, testing initially through towards the 111.20 areas before dropping off from the Tokyo fix to test through the 111.00 level holding through to late in the session before running lower again to the 110.70 area and slowly recovering into the grey hour by a limited 10 pip, Topside offers light through to the 111.70 level where congestive offers are likely to begin with the market increasing in size on a test through to the 112.00 areas, a break above the 112.20-30 area is likely to see some weak stops appearing with the market opening to the 112.50 areas with congestive offers likely, downside bids congestive around the 111.00 areas with possibly some weak stops on a move through the 110.80 level however, bids likely to reappear quickly on any move through to the 110.50, congestion is likely to be a little thinner on a push through the level with better bids likely around the 110.00 levels,

• AUD: Opening on its highs the market saw a quiet session holding around the 0.7370 area for the bulk of the day, the move too the grey hour saw a quick drop lower as Oz sellers saw the market holding just above the 0.7350 level. Topside offers into the 0.7450 levels with possible weak stops on a push through the 0.7460 level however, stronger offers are likely to appear quickly into the 0.7480 areas through to the 0.7500 area and stronger stops possible on a break above the 0.7520 level with congestive offers from there. Downside bids into the 0.7320-00 area with weak stops likely piled up behind the level, a drop through those stops will likely run into bids into the sentimental 50’s and 00 areas however, stronger bids are a little thin with 0.7200 likely to be the stronger of the two with congestion from there to the 0.7150 level where the market is likely to find a more significant bidding area.

Overnight News

USD:

FED dove Evans veers in hawkish direction over rate outlook

TRY:

Turkey nears point of no return as Lira crisis spreads to the banking system

AUD:

REA warns state elections will weigh on property listings

EUR:

Italian banks sovereign debt link evokes doom loop memories

ECB concerns grow over EU banks exposure to Turkey as the Lira slides

Today’s data

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

NZD       BusinessNZ Manufacturing PMI Jul A 51.2 | P 52.8

JPY         Domestic CGPI Y/Y Jul A 3.10% | C 2.90% | P 2.80%

JPY         GDP Q/Q Q2 (P) A 0.50% | C 0.30% | P -0.20%

JPY         GDP Deflator Y/Y Q2 (P) A 0.10% | C -0.20% | P 0.50%

AUD       RBA Monetary Policy Statement

JPY         Tertiary Industry Index M/M Jun A -0.50% | C -0.20% | P 0.10%

08:30     GBP       Visible Trade Balance (GBP) Jun C -11.9B | P -12.4B

08:30     GBP       Industrial Production M/M Jun C 0.20% | P -0.40%

08:30     GBP       Industrial Production Y/Y Jun C 1.90% | P 0.80%

08:30     GBP       Manufacturing Production M/M Jun C 0.90% | P 0.40%

08:30     GBP       Manufacturing Production Y/Y Jun C 1.90% | P 1.10%

08:30     GBP       Construction Output M/M Jun P -0.50%

08:30     GBP       GDP M/M Jun C 0.20% | P 0.30%

08:30     GBP       GDP Q/Q Q2 (P) C 0.40% | P 0.20%

08:30     GBP       Index of Services 3M/3M Jun C 0.60% | P 0.40%

08:30     GBP       Total Business Investment Q/Q Q2 (P) C 0.20% | P -0.40%

12:30     CAD       Net Change in Employment Jul C 24.0K | P 31.8K

12:30     CAD       Unemployment Rate Jul C 5.80% | P 6.00%

12:30     USD       CPI M/M Jul C 0.20% | P 0.10%

12:30     USD       CPI Y/Y Jul C 3.00% | P 2.90%

12:30     USD       CPI Core M/M Jul C 0.20% | P 0.20%

12:30     USD       CPI Core Y/Y Jul C 2.30% | P 2.30%

 

Harry Hindsight

• GBP: Opening around the 1.2885 areas the market drifted through the early Tokyo session testing through to 1.2875 before dipping quickly to test towards the 1.2850 areas before bouncing and slowly making its way back to the opening level, the market ranged around the 1.2880 level through to the grey hour and again dipped this time testing through the 1.2850 area but holding briefly before again making its way back higher triggering some weak stops on a move above the level testing to above the 1.2910 level and ranging through into the NYK session drifting only slightly after early US numbers, Euro’s started to drift lower once the second numbers hit and the Cable slowly pushed through the 1.2850 levels into the London close and dipped in the final hours to the 1.2825 areas.
• EUR: Asia saw the high for the day after several hours of meandering towards the 1.1600 level before slowly lifting through towards the 1.1620 area before drifting into the grey hours again testing through the lows quickly dropping to the 1.1875 level for the official London opening, a quiet London session trading around the 1.1590 levels before drifting slowly into the London session to test the 1.1550 level and then triggering some weak stops on a dip through to the close just above the 1.1520 areas.
• JPY: Opening weakly the USDJPY slipping from the 110.95 levels and testing into the Tokyo fix pushing the 110.80 level ranging through the next few hours with a minor dip to the 110.70 level the move towards the grey hour saw the market rising quickly back after the CNY numbers came in close to there level and leaving the market with a bid tone into the London session, the market continued to slowly rise through to the 111.20 areas into the NYK opening before dropping back a little on slightly weaker than expected PPI numbers and holding around the opening levels for several hours, London out of the way saw the market steadily rising through to the close just above the 111.10 area.
• AUD: A very dull session overall for the Oz with the market drifting a little into the Tokyo session to set the early low 10 pips off the opening level, cross buying against the NZD and a weaker USDJPY saw the Oz push to the days highs just above the 0.7450 level before drifting through into the London session and slowly sinking back to test the lows again around the 0.7415, the market held around this level through to deep into the NYK session before starting a slow drift through to the close holding the 0.7575 area.

 

Yesterday’s premiership results

NZD       RBNZ Rate Decision A 1.75% | C 1.75% | P 1.75%

GBP       RICS House Price Balance Jul A 4% | C 4% | P 2% | R 3%

JPY         Japan Money Stock M2+CD Y/Y Jul A 3.00% | C 3.10% | P 3.20% | R 3.10%

JPY         Machine Orders M/M Jun A -8.80% | C -0.80% | P -3.70%

CNY        CPI Y/Y Jul A 2.10% | C 2.00% | P 1.90%

CNY        PPI Y/Y Jul A 4.60% | C 4.60% | P 4.70%

CHF        Unemployment Rate Jul A 2.60% | C 2.60% | P 2.60%

JPY         Machine Tool Orders Y/Y Jul (P) A 13.00% | P 11.40%

EUR        ECB Economic Bulletin

CAD       Housing Starts Jul A 206K | C 218K | P 248K

CAD       New Housing Price Index M/M Jun A 0.10% | C 0.00% | P 0.00%

USD       Initial Jobless Claims (AUG 4) A 213K | C 217K | P 218K | R 219K

USD       PPI M/M Jul A 0.00% | C 0.30% | P 0.30%

USD       PPI Y/Y Jul A 3.30% | C 3.40% | P 3.40%

USD       PPI Core M/M Jul A 0.10% | C 0.30% | P 0.30%

USD       PPI Core Y/Y Jul A 2.70% | C 2.80% | P 2.80%

USD       Wholesale Inventories M/M Jun (F) A 0.10% | C 0.00% | P 0.00%

USD       Natural Gas Storage A 46B | C 49B | P 35B

 

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