Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,
LMAX Close
USDJPY 108.782 | EURUSD 1.11454 | AUDUSD 0.69294 | NZDUSD 0.66294 | USDCAD 1.31623 | USDCHF 0.99161 | GBPUSD 1.22183 |
LMAX highs and Lows 05.00 GMT
Highs | Lows
EURUSD 1.11478 | 1.11334
USDJPY 108.950 | 108.565
GBPUSD 1.22257 | 1.21191
USDCHF 0.99225 | 0.9910
AUDUSD 0.69073 | 0.68962
USDCAD 1.31733 | 1.31561
NZDUSD 0.66343 | 0.68254
EURCHF 1.10549 | 1.10432
EURGBP 0.91904 | 0.91146
EURJPY 121.378 | 120.925
For Today
• GBP: A steady first few hours before GBPJPY selling saw the market quickly pushing through the 1.2200 level to initially test the 1.2165 level and then drift through to just above the 1.2150 areas for the move into the London session, with growing concern for the GBPJPY as it technically looks weaker through to the 130 level. Downside see’s light congestion around the sentimental values with particular strength on any push towards the 1.2100 level however strong stops are likely on any sudden push through the level and exposes the lows from 2017 below 1.2000 where buyers possibly lurk in size, topside offers limited through to the 1.2350 area with a push through possibly causing a short squeeze through the 1.2400 level however, from there the offers are again likely to appear and with the market struggling for liquidity any signal that the selling is over beware a bounce.
• JPY: The run to the Tokyo session and the release of the BoJ interest decision saw the market steadily rising to its highs pushing towards the 108.95 level and peaking on the dovish tone before retreating from the level and pushing firmly back through the 108.80 opening areas and dipping steadily too the 108.60 level for the move into the London session more on the back of GBPJPY selling than anything else with a technically weak charting seeing further downside potential on the cross. downside bids light through to the 107.20 area where they are likely to increase through to the 106.80 level with possibly strong stops through the level with congestion through to the 106.00 area but only likely to slow the decline rather than stop it. Topside congestion through to the 108.80-109.00 level are likely to reappear and increasing into the 109.00 level, a break above the 109.20 level is likely to run into congestion and stronger offers into the 109.35-60 level.
• AUD: Another limited session for the Oz with most of the focus on the JPY with the Oz centring on the opening around the 0.6900 level and remaining in the 0.6895-0.6910 range through the session before moving through to the London session almost unchanged on the day, downside bids strong into the figure level with weak stops on a dip through the 0.6880 areas with congestion then appearing around the 0.6850 areas with stronger bids then appearing on a dip through to the 0.6930 level, possible weak stops in the mix and then increasing bids into 68 cents. Topside offers lightly through to the 0.6950 areas with congestion then building from that point up the offers increase through to the 70 cents level with strong offers likely to increase through to the 0.7030 areas with limited stops and congestion likely to continue.
• EUR: A slow drift through the session with the market opening on its highs and slipping slowly from the Tokyo opening through to the 1.1135 level before holding quietly around the 1.1140 level through to London, downside congestion limited through to the stronger 1.1120 area with a push through to the 1.1100 areas, although cleared yesterday day traders may still be hanging around, likely to see weak stops on any dip through the level and increasing sellers through the 1.1080 level with dated congestion from pre 2017 as the market aims for lower levels. Topside offers light through to the 1.1200 areas before some resistance is likely to be seen however, a push through the 1.1220 area could see some limited squeeze higher and stronger offers not appearing until the market starts to move through the 1.1260 areas and increasing in size on a test towards the 1.1300 level.

Overnight News
CNY:
Foreign minister Wang Yi says US pressure on China untenable – SMP
USD:
Why the FED is cutting rates when the economy looks good – WSJ
Guggenheim’s Minerd says FED should hike rates, not cut them – BBG
Trump tweet: The EU and China will further lower interest ratges and pump more into their systems, making it much easier for their manufacturers to sell product, in the meantime, and with very low inflation our FED does nothing and probably will do very little by comparison, too bad
MXN:
AMLO says Pemex won’t get emergency funds as there’s no crisis
AMLO would like Mexico central bank to cut rates, boost growth
AMLO says he respects autonomy of Mexican central bank
FinMin Herrera: Govnerment will mobilize 485B MXN to boost infrastructure, investment and private consumption
EUR/GBP:
Vodafone set for EU go ahead on liberty global deal
CNY/USD:
China’s cybersecurity regulations rattle US businesses – WSJ
Asia awash in Chinese steel as Trump tariffs wall off US -Nikkei
JPY:
BoJ leaves interest rates, asset purchases unchanged
BoJ leaves forward guidance for policy rates unchanged
BoJ leaves policy balance rate at -0.1% and 10Yr JGB yield target at about 0%
BoJ sees FY19 core CPI including sales tax at 1.0% vs. 1.1% previously
BoJ won’t hesitate to take additional or extra action if needed
BoJ FY20 core CPI including sales tax at 1.3% vs 1.4% previously
BoJ CPI currently at around 0.5%
BoJ FY21 Core CPI forecast 1.6% unchanged
BoJ FY19 GDP 0.7% vs. 0.8%, FY20 GDP 0.9% unchanged
BoJ downside risks for overseas economies likely to stay
BoJ Uncertainties on protectionism in particular heightening
EUR:
Top German court to rule on ECB’s supervisory role – DPA
SEK:
Sweden 2q GDP contracted 0.1% QoQ vs. est growth of 0.3%

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC
22:45 NZD Building Permits (MoM) (JUN) A -3.9% | P 13.2%
23:30 JPY Jobless Rate (JUN) A 2.3% | C 2.4% | P 2.4%
23:50 JPY Industrial Production (YoY) (JUN P) A -4.1 | C -2.0% | P -2.1%
JPY BOJ Rate Decision (JUL 30) A -0.10% | C -0.10% | P -0.10%
JPY BOJ Outlook Report
JPY BOJ 10-Yr Yield Target (JUL 30) A 0.00% | C 0.00% | P 0.00%
AUD Building Approvals (YoY) (JUN) A -25.6% | C -24.3% | P -19.6%
05:30 EUR French Gross Domestic Product (QoQ) (2Q P) C 0.3% | P 0.3%
05:30 EUR French Gross Domestic Product (YoY) (2Q P) C 1.3% | P 1.2%
06:00 EUR German GfK Consumer Confidence (AUG) C 9.7 | P 9.8
07:00 CHF KOF Leading Indicator (JUL) C 93.3 | P 93.6
09:00 EUR Euro-Zone Economic Confidence (JUsdL) C 102.7 | P 103.3
09:00 EUR Euro-Zone Business Climate Indicator (JUL) C 0.1 | P 0.17
09:00 EUR Euro-Zone Industrial Confidence (JUL) C -6.7 | P -5.6
09:00 EUR Euro-Zone Services Confidence (JUL) C 10.7 | P 11.0
09:00 EUR Euro-Zone Consumer Confidence (JUL F) C -6.6 | P -6.6
12:00 EUR German Consumer Price Index (MoM) (JUL P) C 0.3% | P 0.3%
12:00 EUR German Consumer Price Index (YoY) (JUL P) C 1.5% | P 1.6%
12:30 USD Personal Income (JUN) C 0.3% | P 0.5%
12:30 USD Personal Spending (JUN) C 0.3% | P 0.4%
12:30 USD Real Personal Spending (JUN) C 0.2% | P 0.2%
12:30 USD PCE Core (MoM) (JUN) C 0.2% | P 0.2%
12:30 USD PCE Core (YoY) (JUN) C 1.7% | P 1.6%
13:00 USD S&P CoreLogic CS 20-City (MoM) SA (MAY) C 0.2% | P 0.0%
13:00 USD S&P/Case-Shiller Composite-20 (YoY) (MAY) C 2.4% | P 2.54%
13:00 USD S&P/Case-Shiller US Home Price Index (YoY) (MAY) P 3.54%
14:00 USD Pending Home Sales (YoY) (JUN) P -0.8%
14:00 USD Consumer Confidence Index (JUL) C 125.0 | P 121.5
14:00 USD Conf. Board Present Situation (JUL) P 162.6
23:01 GBP GfK Consumer Confidence (JUL) C -13 | P -13
23:50 JPY Loans & Discounts Corp (YoY) (JUN) P 3.24%

Harry Hindsight

• GBP: A slow drift through the Asian session with the market opening on its highs around the 1.2390 level and then slowly drifting to move through into the London session testing through the 1.2370 level, an old trend line supplied the support and eventually the market dipped through the level with Brexit or no deal Brexit seeing more talk and the likelihood of intransience building on both sides, add to which EURGBP buying on the back of the Vodafone/liberty globe deal getting the thumbs from authorities causing said buying to go through and the move through the session into NYK with the market testing through to the 1.2300 levels, NYK were also sellers and the market slowly pushed through to the 1.2250 areas running into some weak buying and then dipping through to the 1.2210 areas on its final move and a slow run through to the close with the market holding the lows but unable to move higher.
• JPY: Early Asia saw the market steadily moving to the lows, drifting in pre Tokyo to test the 108.60 level before dipping through to the 108.40 areas to make the lows, the market started a steady recovery pushing slowly through the 108.60 level again and ranging in a tight range through London and into NYK before quickly testing higher to the 108.90 level into the NYK option cut before slowly drifting through to the close.
• AUD: Choppy day but limited range through the day, opening around the 0.6910 areas saw the market dipping on the move into Tokyo, the market then bounced around the 0.6905 areas through deep into the London session before dropping through to the 69 cents level and although the NYK session tested back towards the 0.6910 level it soon dipped again to make the low around 0.6895 before pushing back to hold around the 69 cents level to the close.
• EUR: Early Asia took the market from the opening around the 1.1130 level to test towards the 1.1140 level in slow trading before starting a slow drift through into the London session pushing slightly below the 1.1120 areas in early London morning, the range narrowed down with the market holding through to the NYK session before making the day’s lows slightly below the 1.1115 area before starting a steady session of EURGBP buying and taking the Euro through to its highs just above the 1.1150 level before holding around the 1.1145 area to the close.

Yesterday’s Premiership results
JPY Retail Trade (YoY) (JUN) A 0.5% | C 0.2% | P 1.3%
JPY Retail Trade s.a. (MoM) (JUN) A 0.0% | C -0.3% | P 0.4%
JPY Large Retailers’ Sales (JUN) A -0.5% | C -0.6% | P -0.5%
GBP Net Consumer Credit (JUN) A 1.0b | C 0.9b | P 0.8b
GBP Consumer Credit (YoY) (JUN) A 5.5% | P 5.6%
GBP Net Lending Sec. on Dwellings (JUN) A 3.7b | C 3.5b | P 3.1b
GBP Mortgage Approvals (JUN) A 66.44k | C 65.8k | P 65.4k
GBP Money Supply M4 (MoM) (JUN) A 0.1% | P -0.1%

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