Daily FX Market Commentary

Good morning,

 

LMAX Close

USDJPY 114.534 | EURUSD 1.14782 | AUDUSD 0.7103 | NZDUSD 0.6533 | USDCAD 1.28674 | USDCHF 0.99235 | GBPUSD 1.29394 |

 

LMAX Highs and Lows 5.00am GMT

                                High | Low

EURUSD               1.14878 | 1.14634

USDJPY                 114.551 | 114.218

GBPUSD               1.29530 | 1.2922

USDCHF               0.99262 | 0.99047

AUDUSD              0.71092 | 0.70793

USDCAD               1.28873 | 1.28699

NZDUSD               0.65170 | 0.64887

EURCHF                1.13891 | 1.13732

EURGBP               0.88752 | 0.88656

EURJPY                 131.486 | 131.007

 

For today

• GBP: Opening a little higher from the closing drop off the market traded through to the 1.2950 level before starting a slow steady slide to the 1.2925 areas and basing along that level in a 10 pip range through to the grey hour, downside bids through to the 1.2900 areas with possibly weak stops on a move through however, some congestion just through the level and likely two way action through to the 1.2850 level however, through there the market becomes a little bit unsure of itself and while there may be bids into the 1.2800 area through this level the market is open to probe to the lows from August however, much of the movement this week has been EUR and USD driven, topside offers light through to the 1.3000 level with some weak stops through the level however, congestive offers are likely to be present on the approach to the 1.3050 level with limited stops on the handle and the 1.3100 a little bit of a grind away.
• JPY: Opening around yesterday’s highs the market limped into the Tokyo session testing only as far as the 114.55 level before starting a slow drift through the session to the 114.25 areas, the move towards the grey hour saw the market reversing a little and moving into the hour pushing back towards the 114.40 level, Topside offers into the 114.50-60 areas with limited weakness through the level and then likely to increase on any push for the 1.1500 level however, very little other than sentiment in the area the market is likely to see stronger offers on any push beyond the level and more towards the 1.1550 level and the highs from Mar 2017 defining the topside, downside bids light through the 114.00 level with weak stops on a move through will see limited buying until closer to the 113.20 areas where better bids are possible.
• AUD: The Oz continued its steady decline through the session even with the better trade balance the market pushed through to the grey hour holding just above the 0.7085 levels, the trade balance numbers saw the market recover to above the 71 cents level but unable to really challenge the early highs just above the 0.7110 level and the market moves towards the grey hour just holding in light trading for the pair, Topside offers light through to the 0.7110-20 areas with weak stops likely on a push through the level and very little to halt a move back to the 0.7150 areas with a possibility of light stops opening up to a run to the 72 cents level where stronger offers are likely
• EUR: The damage done at the end of yesterday session the move into the Asian session saw Sydney attempting to buy the bounce only for it to struggle through to the 1.1485 areas before slipping back to the 1.1465 level and basing along that level through to the grey hour, topside offers light back through the 1.1500 areas with possibly weak stops on a push through the 1.1520-30 areas and the market limited through 1.1550 only once the market pushes back towards the 1.1580-1.1600 level do the offers start to increase, a push through 1.1600 area is likely to be difficult with plenty of congestion possible and any stops likely to be matched against the congestion, downside bids light through to the 1.1440 level however, through that level will see some congestion around the 1.1420-00 areas and possibly extending through and increasing into the 1.1360 level.

 

Overnight News

USD:

Powell says FED may lift rates to levels that restrain growth

Brainard: Role of USD as worlds reserve currency very strong

Mester: Inflation around 2% depends on monetary policy, growth

Mester: Still appropriate to raise rates gradually

Mester: FED closer to new phase of increased data dependence

Mester: Pace of rate hikes depend on inflation

Mester: Not as concerned about flat yield curve

Powell: Very happy about where economy is

Powell: Unemployment lowest in 20 years

Powell: inflation right at our 2% goal

Powell: Remarkably positive set of economic circumstances

Powell: We’re working hard to sustain the expansion

Powell: Expansion can continue for quite some time

Powell: Phillips curve not dead but may be resting

Powell: Expect to continue to see gradual increase in wages

Powell: We’re pretty close to full employment

Harker: US labour market has little slack left

Evans: Path of Fed rate increases is as clear as it can get

The US Navy is proposing a major show of force to warn China CNN

US seeks to constrain China with non-market economy clause in USMCA

The US military is planning a serious showdown with China, a significant show of force on tense tides BDR

EUR:

Italy will need faster growth to lower deficit, league says

OIL:

Crude jumps as Iran’s supply gap overshadows US supply gain

 

Today’s data

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

AUD       Trade Balance Aug A 1.60B | C 1.45B | P 1.55B

11:30     USD       Challenger Job Cuts Y/Y Sep P 13.70%

12:30     USD       Initial Jobless Claims (SEP 29) C 206K | P 214K

14:00     CAD       Ivey PMI Sep C 61.4 | P 61.9

14:00     USD       Factory Orders Aug C 0.90% | P -0.80%

14:30     USD       Natural Gas Storage P 46B

 

Harry Hindsight

• GBP: Opening around the 1.2980 level the market drifted through to midsession testing to the 1.2970 levels before lifting quickly as comments from Italy suggested that there would be a reduction in the deficit in 2021 of course the forecast is just that a forecast and as with today’s item on growth required, Cable tested lightly through the 1.3000 level and the move was more the drag of the Euro taking it higher. The move through to the grey hours saw the market holding close to the figure level with some steady buying taking the market through to the 1.3010 level and by midmorning pushed through a little further before start declining through to the open in NYK testing through to the 1.2965 level recovering quickly on the open and eventually pushing through to extend the highs marginally from there the USD saw several Fed speakers late in the session and this saw the Cable dropping back and literally dumping into the close with Powell’s comments to test to the 1.2925 level.
• JPY: A quiet move through into the Tokyo session dipping back to the 113.55 level before moving quickly higher as EURJPY buying and USDJPY quickly moving up to the 113.85 levels and into the offers, the move to the grey hour saw the market drifting through to the opening levels and a slow rise through the London opening for the first push towards the 114.00 level and was unable to push through the 113.90 levels trading tightly around the 113.85 level through into the NYK session and the break through the 113.90 level saw the market gap through the level triggering weak stops to push gradually through the 114.00 level and continue on into late in the session to push to a close and testing its highs around the 114.55 area.
• AUD: A slow decline through the day with EURAUD buying triggering the Asian low through to the 0.7165 areas before returning to the opening 0.7190 areas to hold into the grey hour before slowly setting off for the lows, pushing through to the 0.7150 areas and holding through London and into the NYK session before drifting lower again to test towards the 71 cents level for the close.
• EUR: Moving quietly through the session into Tokyo the market slipped a little lower to test the 1.1535 area before the Italian news helped the Euro quickly to the 1.1595 areas, the market struggled with the level through to deep into the London session before the run of FED speakers started to hit the wire, the Euro slowly channelled lower through to the last hour pushing the 1.1515 areas, Powell’s comments put paid to any return for the Euro and the market dropped quickly through to close around the 1.1480 areas.

 

Yesterday’s premiership results

AUD       AiG Performance of Service Index Sep A 52.5 | P 52.2

GBP       BRC Shop Price Index Y/Y Sep A 0.20% | P 0.10%

AUD       Building Approvals M/M Aug A -9.40% | C -2.50% | P -5.20% | -4.60%

EUR        Italy Services PMI Sep A 53.3 | C 52.4 | P 52.6

EUR        France Services PMI Sep (F) A 54.8 | C 54.3 | P 54.3

EUR        Germany Services PMI Sep (F) A 55.9 | C 55.3 | P 55.3

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

GBP       Services PMI Sep A 53.9 | C 53.9 | P 54.3

EUR        Eurozone Retail Sales M/M Aug A -0.20% | C 0.20% | P -0.20% | R -0.60%

USD       ADP Employment Change Sep A 230K | C 185K | P 163K

USD       US Services PMI Sep (F) A 53.5 | C 53.6 | P 52.6

USD       ISM Non-Manufacturing/Services Composite Sep A 61.6 | C 58.3 | P 58.5

USD       Crude Oil Inventories A 8.0M | C 1.1M | P 1.9M

 

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