Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

LMAX Close

USDJPY 106.213 | EURUSD 1.09686 | AUDUSD 0.67164 | NZDUSD 0.63091 | USDCAD 1.33251 | USDCHF 0.99061 | GBPUSD 1.20666 |

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               109.741 | 1.09309

USDJPY                106.385 | 106.173

GBPUSD              1.20747 | 1.20253

USDCHF               0.99276 | 0.99057

AUDUSD             0.67190 | 0.66882

USDCAD              1.33467 | 1.33203

NZDUSD              0.63085 | 0.62697

EURCHF               1.08742 | 1.08523

EURGBP              0.90934 | 0.90748

EURJPY                116.537 | 116.245

For Today

  • GBP: Quiet move through into the Tokyo session before drifting from the opening levels to test to the 1.2050 areas holding quietly before dipping through to the 1.2030 level and holding quietly through to the London session, Downside bids into the 1.2000 level with possibility of option plays around the level, a strong possibility of stops on a move through the level and exposing weakness through to the 1.18 handle however, bargain hunters could be waiting in the wings no matter what the result of the next few days indicate, topside offers light back through the 1.2100 level with possible short term sellers reappearing however, given the back drop in economics and internal politics any strong news could see a strong short squeeze appearing with very little in the way of stronger offers until around the 1.2300 areas and some weakness beyond that level.
  • JPY: Opening quietly and making minor moves to the 106.25 level before moving into the Tokyo session back on its lows just through the 106.20 area before catching buyers into the Tokyo fix and rallying through the 106.30 level with little conviction holding then running steadily towards the 106.40 areas before slowly drifting back a little Downside bids starting to light through the 106.00 level but some congestion through to the 105.80 areas before firming up around the 105.00 areas and increasing on any move to the 104.50 level with stops likely to not appear until through the 104.00 level and the likelihood of buyers willing to buy into any dips, Topside offers through the 106.80 area likely to be reasonably strong with possible weak stops through the 107.00 area opening a challenge to the 107.50 level before stronger congestion appears with limited potential to squeeze to the 108.00 level.
  • AUD: From the opening almost completely one way with the market dropping back from the 0.6718 area to test through the 67 cents area quietly and basing eventually around the 0.6690 for the RBA announcement. RBA release saw them holding the cash rate at its current lows and while the message was very little different there did seem to be a less dovish message with only the hints of possibilities. Downside bids into the 0.6680 level with a strong break likely to trigger weak stops and the market then likely to run into congestive bids into the 0.6650 area and sentimental levels likely to dominate through any deeper moves and the Oz possibly getting ahead of itself, topside offers if there was anything for the market to rally on the back of could see limited congestion much the same as the downside with the 50/00 areas finding the bulk of the offers.
  • EUR: Opening around the 1.0970 area the market couldn’t push much beyond the level and the move through into the Tokyo session and a slow drift through to the 1.0930 level with little in the way of support to halt the slide until that point. , downside bids into the 1.0920 level and likely to continue through to the 1.0880 level however, congestion is then likely to start increasing as the market moves into the mid ranges from 2015-16 with limited bids until 1.0800, Topside offers light back through the 1.1000 areas with weak stops above the 1.1020 level opening the market to a possible squeeze through to the 1.1080 areas and offers reappearing.

 

 

Overnight News

EUR:

Euro area factories extend slump as ECB stimulus debate heats up – BBG

Italy: Proposed leftist coalition faces widespread opposition – Brietbart

USD/CNY:

China, US struggle to set meeting as tariffs erode trust – BBG

GBP:

No deal Brexit looms as leak reveals Dominic Cummings considers EU negotiations a sham – TEL

AUD:

RBA’s Economic optimism looks misplaced – DJ

AUD July retail sales fall -0.1% MoM vs. Est. 0.2%

2 Q government consumption to add 0.5% to GDP

2Q Investment to cut 0.1% from GDP

RBA: Says outlook for global economy reasonable

RBA: Tease policy if needed to support sustainable growth

RBA: Will monitor developments in labour markets closely

RBA: Rates to remain low for extended period

RBA: risks to downside for global economy

RBA: Signs of turnaround in housing market, especially in Sydney and Melbourne

RBA: Economy can sustain lower rate of unemployment

RBA: The trade technology disputes are affecting international trade flows and investment

RBA: Central scenario for underlying inflation to be a little under 2% in 2020

RBA: Global financial conditions remain accommodative

RBA: AUD at its lowest level of recent times

RBA: inflation likely to be subdued for some time

RBA: Economic growth in Australia over the first half of this year has been lower than earlier expected

RBA: Outlook for consumption remains main domestic uncertainty

RBA: Further lift in wages growth will be welcome

RBA: Outlook supported by low interest rates, tax cuts, Infrastructure spending, house price revival, strong resource sector

RBA: Labour data suggests economy can sustain lower rates of unemployment, underemployment

USD:

Trump doesn’t necessarily need a deal Beijing to be re-elected – CNBC

CNY/HKD:

Hong Kong unrest has become a national security and sovereignty issue for China – WE9

 

Today’s Data

Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC

JPY         Monetary Base (YoY) (AUG) A 2.8% | P 3.7%

JPY         Monetary Base End of period (AUG) A ¥515.9t | P ¥518.1t

AUD       Current Account Balance (Australian Dollar) (2Q) A A$5.9b | P -A$2.9b | R -A$1.1b

AUD       RBA Cash Rate Target (SEP 3) A 1.0% | C 1.0% | P 1.0%

06:30     CHF        Consumer Price Index (MoM) (AUG) C -0.1% | P -0.5%

06:30     CHF        Consumer Price Index (YoY) (AUG) C 0.3% | P 0.3%

06:30     CHF        CPI EU Harmonized (MoM) (AUG) P 0.0%

06:30     CHF        CPI EU Harmonized (YoY) (AUG) P 0.4%

06:30     CHF        CPI Core (YoY) (AUG) C 0.4% | P 0.4%

08:30     GBP        Markit/CIPS UK Construction PMI (AUG) P 45.3

13:30     CAD       RBC Canadian Manufacturing PMI (AUG) P 50.2

14:00     USD        ISM Manufacturing (AUG) C 51.3 | P 51.2

14:00     USD        ISM Employment (AUG) C 51.5 | P 51.7

14:00     USD        ISM Prices Paid (AUG) C 45.8 | P 45.1

14:00     USD        Construction Spending (MoM) (JUL) C 0.3% | P -1.3%

22:30     AUD       AiG Performance of Service Index (AUG) P 43.9

 

Harry Hindsight

 

  • GBP: Opening around the 1.2150 level and slight rise through into the Tokyo session too the 1.2165 levels before drifting off into the midsession testing back through the 1.2150 level, the move through to the London session saw the market again testing the topside and pushing through to the 1.2175 level before Boris Johnson decided to speak, asserting that 31st Oct is Brexit day “no ifs or buts” and “back him or lose your jobs” the Cable tumbled dropping through to the 1.2100 level pausing then carrying on through to push through the 1.2085 level before slowing its descent, some minor attempts to push back through the figure level failing and then moving into the NYK session saw the market dropping steadily through to the 1.2035 lows before grinding through to the 1.2070 and a long run to close in a quiet range.
  • JPY: Opening a little lower having traded in premarket conditions towards the 105.85 area, the opening saw the market dropping back from the 106.05 area and tested to the 105.95 level before rallying quickly as early Tokyo moved in and pushed the market above the 106.10 level before pausing for a short time and testing eventually through to the 106.20 area for the fix, the market ranged from then on testing back to the 106.10 level and pushing through the 106.20 marginally through to the London session, pushing through to the 106.30 level holding for a short period and then pushing through to the highs around the 106.40 level and a slow range through into the NYK session before drifting back through to the 106.20 and triggering light stops on a dip back through the 106.10 level rising only a little for the close.
  • AUD: A quiet range through to the London session opening a little lower and falling back and then ranging around the 0.6730 area, the move through into the London session saw the market drifting through to its lows as the market moved through into the NYK session testing the 0.6710 area and with while there was a brief push to the opening levels from there a US bank holiday saw limited movement and liquidity and holding around the 0.6715 area to the close.
  • EUR: Opening quietly the Euro was the least active through the Asian session if that is possible, testing to its highs on the opening in Tokyo testing around the 1.0995 before holding around the 1.0990 level all the way through to the London session, London were slow sellers as the market followed the move in Cable to test to the 1.0960 areas and based through the balance of the day on that level before rising and holding quietly around the 1.0970 through to the close.

 

Yesterday’s Premiership results

AUD       AiG Performance of Manufacturing Index (AUG) A 53.1 | P 51.3

NZD       Terms of Trade Index (QoQ) (2Q) A -2.6% | P 1.0%

CNY        Caixin China PMI Mfg (AUG) A 50.4 | C 49.8 | P 49.9

CHF        Retail Sales Real (YoY) (JUL) A 1.4% | P 0.7%

CHF        PMI Manufacturing (AUG) A 47.2 | C 45.7 | P 44.7

GBP        Markit UK PMI Manufacturing s.a. (AUG) A 47.4 | C 49.5 | P 48

MXN      Markit Mexico PMI Mfg (AUG) A 49.0 | P 49.8

 

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