Daily FX Market Commentary

Good morning,

 

LMAX Close

USDJPY 111.135 | EURUSD 1.15947 | AUDUSD 0.71134 | NZDUSD 0.65224 | USDCAD 1.31633 | USDCHF 0.97503 | GBPUSD 1.30267 |

 

LMAX Highs and Lows 5.15am GMT

                                High | Low

EURUSD               1.16040 | 1.15881

USDJPY                 111.650 | 111.465

GBPUSD               1.30235 | 1.30084

USDCHF               0.97391 | 0.97256

AUDUSD              0.71215 | 0.70938

USDCAD               1.30774 | 1.30515

NZDUSD               0.65229 | 0.65058

EURCHF                1.12894 | 1.12819

EURGBP               0.89124 | 0.89062

EURJPY                 129.511 | 129.189

 

For today

• GBP: Brexiteer coup upset the market however, this has been in the wind for several weeks, the market dipped on the opening to the 1.3015 level and while there was a slight attempt to recover through into the Tokyo session any further attempts disappeared, and the market drifted through the session heading to below the 1.3010 areas into the grey hour, Topside sees some clearance on yesterdays trading however, stronger offers still remain on any move towards the 1.3100 with the market a little congested through the level with some weak stops in the mix would suggest a move through to the 1.3150 areas more of a grind, that is unless the EU has a change of heart, stops possibly through the 1.3150 area and the market opens to the 1.3200-20 areas where fresh offers are likely to slow the market, downside bids light through the 1.3000 area and open to the 1.2950 with some congestive bids in that area but limited until the stronger bids appear on a dip to the 1.2900 level with possible stops increasing on a move through that level.
• JPY: In quiet trading the Cable was not the only one struggling with the USDJPY holding above the 111.60 level through to the Tokyo fix before dropping away to test to the 111.50 level and then trading quietly around the level through to the grey hour on a thin quiet market. light offers into the current highs with the market lightly congestive to the 111.80 level and stronger offers moving in from there into the 112.00 areas, a push through the 112.10-20 area will likely see weak stops appearing however, there could be some light profit taking appearing in the area and the market struggling through to the 112.50 level and better offers starting to appear, congestive offers are likely to continue from that point, downside bids light through to the 111.00 areas with weak stops on a dip through the 110.80 area and the market opening to the 110.50 where better bids are likely to appear and weak congestion below the level.
• AUD: Having made its way to the highs at the end of yesterday’s session the follow through failed to materialize from the CK bid and the market moved into the Tokyo session falling back to trade around the 71 cents level in a lacklustre session, Downside bids limited with weak stops possible through the 0.7080 level however, the downside is likely to see congestive bids for a good distance with the sentimental levels likely to be stubborn through to the 70 cents level, possible option plays in that area having not seen the area since 2016. Topside offer light through the 0.7250 area with possibly some weak stops along the way and stronger offers not likely to be seen until the market pushes towards the 73 cents level with stops possibly beyond that level.

 

• EUR: Euro drifted from the opening dipping back through the 1.1600 levels into the Tokyo session and heading through to the 1.1585 areas for the move into the grey hour on very quiet trading. Downside bids light through the 1.1560-40 areas with stronger bids likely on any test of the 1.1520-00 area however, weak stops on a move through the 1.1480 area is likely to see a stronger test lower with limited bids until the approach of the 1.1400 areas, topside offers strong through to the 1.1640-60 areas where activity over the past couple of weeks would suggest strong offers resting there and likely continuing through to the 1.1700 before any weakness appears on a push through to the 1.1740 area.

 

Overnight News

GBP:

Theresa May to face Brexiter coup within days

Downing street drawing up secret plans to dump chequers plan

USD:

NHC says strengthening of hurricane Florence is forecast Tuesday night and Wednesday Rtrs

Hurricane Florence could be the most powerful storm to ever make landfall BDR

AUD:

CK’s $9.3B Australia pipeline bid clears competition test

CNY:

Most central banks haven’t been shifting reserves in Yuan UBS

USD/CNY:

Wall street dangerously exposed as China digs in for Trump showdown Tel

China woos US companies again, curb trade threats WSJ

EUR/GBP:

UK and EU are said to plan special summit to sign Brexit deal, the one not yet agreed

Juncker to hold firm on Brexit terms, offers close partnership EU official

EUR:

Macron’s tax promises challenged by a weaker French economy

OIL:

API is said to report US crude stocks fell 8.64M last week

 

Today’s data

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

JPY         BSI Large Manufacturing Q/Q Q3 A 6.5 | C 8 | P -3.2

AUD       Westpac Consumer Confidence M/M Sep A -3.00% | P -2.30%

09:00     EUR        Eurozone Industrial Production M/M Jul C -0.50% | P -0.70%

12:30     CAD       Capacity Utilization Rate Q2 C 86.90% | P 86.10%

12:30     USD       PPI M/M Aug C 0.20% | P 0.00%

12:30     USD       PPI Y/Y Aug C 3.20% | P 3.30%

12:30     USD       PPI Core M/M Aug C 0.20% | P 0.10%

12:30     USD       PPI Core Y/Y Aug C 2.80% | P 2.70%

14:30     USD       Crude Oil Inventories P -4.3M

18:00     USD       Federal Reserve Beige Book

 

Harry Hindsight

• GBP: A supposed thawing of negotiations between the UK with EU leaders indicating to the EU Commissions to soften there stance, somewhat short lived but the market reacted well over the past 24hrs and the push through the 1.3000 areas continued from the opening in Tokyo with the market rising off the opening 1.3030 areas and steadily climbing to the 1.3050 areas into the grey hour, the market held the level through to the official opening and eventually quickly rose to the 1.3085 areas before drifting back through into early morning, a higher weekly earnings average helped the market to the highs before dropping quickly lower with an uptick in claimant numbers and the market was through the opening levels and quickly spiking lower, the market steadied for the run through to the NYK session with a steady drift back to the 1.3000 level however, early NYK sellers through their weight behind the market and it dropped quickly as a combination of Merkel and Macron backing away from perceived interference in the EU, and the market tested through to the 1.2965 areas before staring a slow rise to recapture the losses pushing through to end the day almost unchanged.
• JPY: USDJPY saw strong buying once it moved into the Tokyo session moving off the 111.10 areas and running through to the 111.40 areas and ranging around the level through into the London session with another steady rally through towards the 111.60, some light cross selling through the morning in London saw the market dipping back to the 111.30 areas for the move into the NYK session and the rally reappearing for a push through to the 111.65 areas and a tight range through to the close around the 111.60 levels.
• AUD: A limited range for the Oz with early selling from the opening forcing the market through the 71 cents level into mid-Tokyo before starting a recovery through to the grey hour and a push through the opening levels triggering light stops on a move to the 0.7120 areas, early London forced the market to just short of the 0.7130 levels to post the highs for the day and having spent a few hours around those highs eventually saw the market drop back steadily through to the NYK session extending the lows through the 0.7090 area and holding quietly around the figure level through to late in the session where early Sydney moved in as buyers appeared on the back of the CK’s pipeline bid was cleared to go ahead and a return to the 0.7120 area for the close.
• EUR: Early sellers saw the market dipping through to the 1.1580 from the opening just below the 1.1600 area however, with what looked like a return to sanity commentary through the night suggested that a softening of terms and rhetoric was going to see a coming together of the EU and UK for some kind of deal however, we didn’t have to wait long for the rhetoric to start afresh and while it wasn’t as vehement as you’d expect it was short lived and the high made into the London opening of 1.1645 was reversed and the market dropped all the way back to the 1.1580 into midmorning in London and the market dipped into the NYK opening to the 1.1565 levels to make the lows, the rest of the session saw some small gains and attempts to the opening level before early Sydney appeared to help Oz and push the USD a little lower.

 

Yesterday’s premiership results

JPY         Japan Money Stock M2+CD Y/Y Aug A 2.90% | C 3.00% | P 3.00% | R 2.90%

AUD       NAB Business Conditions Aug A 15 | C 15 | P 12

AUD       NAB Business Confidence Aug A 4 | C 5 | P 7

JPY         Tertiary Industry Index M/M Jul A 0.10% | C 0.10% | P -0.50% | R -0.60%

GBP       Jobless Claims Change Aug A 8.7K | C 3.6K | P 6.2K

GBP       Claimant Count Rate Aug A 2.60% | P 2.50%

GBP       Average Weekly Earnings 3M/Y Jul A 2.60% | C 2.50% | P 2.40%

GBP       Weekly Earnings ex Bonus 3M/Y Jul A 2.90% | C 2.70% | P 2.70%

GBP       ILO Unemployment Rate 3Mths Jul A 4.00% | C 4.00% | P 4.00%

EUR        German ZEW Economic Sentiment Sep A -10.6 | C -13.4 | P -13.7

EUR        German ZEW Current Situation Sep A 76 | C 72.3 | P 72.6

EUR        Eurozone ZEW Economic Sentiment Sep A -7.2 | C -14.9 | P -11.1

EUR        Eurozone Employment Change Q/Q Q2 A 0.40% | C 0.40% | P 0.40%

EUR        Eurozone Employment Change Y/Y Q2 A 1.50% | C 1.40% | P 1.40%

CAD       Housing Starts Aug A 201K | C 218K | P 206K

USD       Wholesale Inventories M/M Jul (F) A 0.60% | C   0.70%    0.70%

 

 

 

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