Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 106.408 | EURUSD 1.10346 | AUDUSD 0.67978 | NZDUSD 0.63614 | USDCAD 1.32233 | USDCHF 0.98088 | GBPUSD 1.22528 |

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               1.10395 | 1.10245

USDJPY                106.751 | 106.329

GBPUSD              1.22605 | 1.22323

USDCHF               0.98428 | 0.9806

AUDUSD             0.68252 | 0.67908

USDCAD              1.32310 | 1.32173

NZDUSD              0.63774 | 0.63557

EURCHF               1.08566 | 1.08165

EURGBP              0.90173 | 0.90021

EURJPY                117.741 | 117.332

For Today

• GBP: The market opened on its highs and while volumes were better than yesterday the market drifted for the most part from the opening just short of the 1.2260       area slipping back slowly to test the 1.2235 level and holding quietly just above the level to the London session, Topside congestion through to the 1.2300 level and with the voting over and still unclear of the ultimate result the market remains at a nervous juncture, a break through the 1.2310-20 area will see stops appearing and the market then free to challenge towards the 1.2360 level with possible light offers building to stronger offers into the 1.2400-50 level. Downside bids likely to be weak but congested around the 1.2150 and 1.2100 areas a break will again open a test through to the 1.2000 levels with strong bids on any penetration of the level with a mix of weak stops through the level and particularly strong if the market can push through 1.1950.
• JPY: Stronger buying in USDJPY once the market moved away from the 106.35 area where it opened testing initially through to the highs of yesterday, dipping then running strongly through to push to the 106.75 in a quick move before drifting from there back towards the 106.50 areas for the move into London, . 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: A quiet range through the early part of the session with stronger GDP numbers helping the Oz higher with the market quickly and firmly pushing through the 0.6800 area testing to the 0.6825 area before holding quietly with a slight drift through to the London session, downside bids likely to reforming around the 0.6700 areas and increasing through to the 0.6680 level, a break through the level is likely to see weak stops appearing and the market open to a larger move over the long run however, a dip into the 0.6620 area will again see strong bids appearing, Topside offers still remain in the area around the 0.6825 areas with a push through to the 0.6830 level with congestion then appearing through the 0.6840 level but becoming weaker until the stronger offers into the 0.6880 areas and through onto the 69 cents level.
• EUR: A very quiet session for the Euro with the market drifting a little opening around the 1.1035 level and then slipping back from the highs around the 1.1040 area and testing through to the London session holding the 1.1025 areas. 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 through the 1.1040-60 area with increasing congestion on a test to the 1.1100 areas, weak stops likely on a break of the 1.1120 level and the market then running to weaker congestion into the 1.1140-60 and increasing on any move to the 1.1180 level.

Overnight News

GBP:

Second reading of the Benn Bill passes 329-300 Govt. Defeat

Third reading 327-299 Govt. Defeat

Vote to hold a general election defeated with for 298-56 and requiring 2/3 majority 434 was required

Bill now passes to house of Lords however, there are 100 amendments so will be held up until   its too late

Slowing path to an election for now

USD/CNY:

US-China trade talks to resume, but new tariffs could complicate them

US-China talks to take part in early Oct

Trump: China trade war: We had to do this – DPA

CNY:

China local governments sound alarm on debt obligations FT

China’s private bond defaults climb to record $4.4B – BBG

NZD:

ASB bank lowers NZ GDP growth forecast as construction declines BBG

AUD:

RBA nonplussed by soggy growth and trade war

ANZ sees RBA cutting cash rate to 0.25% by May 2020

HKD:

Hong Kong’s leader bends to protest. But it may not break the movement – NYT

OIL:

API reports US crude stockpiles rose 401k BBL last week – BBG

Today’s Data

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

AUD       Trade Balance (JUL) A A$7268m | C A$7000m | P A$7977m

05:45     CHF        Gross Domestic Product (QoQ) (2Q) C 0.2% | P 0.6%

05:45     CHF        Gross Domestic Product (YoY) (2Q) C 0.9% | P 1.7%

06:00     EUR        German Factory Orders n.s.a. (YoY) (JUL) C -4.2% | P -3.6%

07:30     EUR        Markit Germany Construction PMI (AUG) P 49.5

11:00     MXN      Consumer Confidence Index (AUG) C 103.6 | P 105.1

12:15     USD        ADP Employment Change (AUG) C 149k | P 156k

12:30     USD        Initial Jobless Claims (AUG 31) C 215k | P 215k

12:30     USD        Continuing Claims (AUG 24) C 1688k | P 1698k

14:00     USD        Factory Orders (JUL) C 1.0% | P 0.6%

14:00     USD        Durable Goods Orders (JUL F) C 2.1% | P 2.1%

14:00     USD        ISM Non-Manufacturing/Services Composite (AUG) C 54.0 | P 53.7

15:00     USD        DOE U.S. Crude Oil Inventories (AUG 30) C -2680k | P -10027k

22:30     AUD       AiG Performance of Construction Index (AUG) P 39.1

23:30     JPY         Overall Household Spending (YoY) (JUL) C 0.8% | P 2.7%

23:30     JPY         Real Cash Earnings (YoY) (JUL) C -0.7% | P -0.5%

23:30     JPY         Labour Cash Earnings (YoY) (JUL) C 0.1% | P 0.4%

Harry Hindsight

 

• GBP: A quiet rally through the Asian session after the first reading and defeat for the Government over a no deal Brexit, opening around the 1.2085-1.2100 level the market       filled the gap and drifted back to the closing level before moving into mid-session and starting a slow rise through to the 1.2100 level and holding for a couple of hours before pushing to the 1.2110 level and drifting through into the London session holding the figure area, London were quick buyers from the opening taking the market in a steady rise through to the 1.2150 level before pausing and then renewing the rally through to 1.2200 areas for the move into NYK, less impressed by the news the NYK session tested back to the 1.2160 level before starting its own run as the London session left the scene, the rally moved through to the close with the results of other votes confirming yesterdays vote and putting a halt to any thoughts of an election for the moment however, these votes for the moment are non-binding and there is still the question of constitutional ascension (Queen has to sign), the market finished the day pushing through to the 1.2250 areas and a long way from the opening.
• JPY: Early trading saw the market dipping into early Tokyo to test the 105.85 areas before rallying       through the 106.00 level and holding the area through to the grey hour, eventually the market broke the 106.10 level the previous high and pushed to the 106.25 areas and then slowly continued the rise through to the NYK session through the 106.30 level before dipping a little lower through to the 106.15 areas, end of London saw the market then continue its slow grind higher testing to the 106.45 areas and a long run to the close around that area.
• AUD: As with the USDJPY the Oz managed a steady rise through the day, opening around the 0.6760 level the market made its lows in early trading around the 0.6755 level before starting its slow climb with expected GDP testing in early Tokyo to the 0.6780 level and the area proving to strong for Tokyo and the market held through into London between the 0.6760-70 areas before slowly pushing at the topside of its boundaries and slowly pushing to the 68 cents level as the London session left, leaving the market in a quiet range running to the close.
• EUR: A quiet range through the Asian session opening around the 1.0975 area and slowly pushing only to the 1.0980       before holding in a very quiet range to the London session, London were steady buyers from the opening and early trading eventually saw the market pushing quickly through the 1.1000 triggering some weak stops on the move before settling down to a tight range around the 1.1015-20 areas through into the NYK session before stepping up to the 1.1030 areas to hold quietly again in a tight range with a minor attempt to the 1.1040 level before closing just off the highs.

 

Yesterday’s Premiership results

AUD       AiG Performance of Service Index (AUG) A 51.4 | P 43.9

AUD       Gross Domestic Product (QoQ) (2Q) A 0.5% | C 0.5% | P 0.4%

AUD       Gross Domestic Product (YoY) (2Q) A 1.4% | C 1.4% | P 1.8% | R 1.7%

CNY        Caixin China PMI Composite (AUG) A 51.6 | P 50.9

CNY        Caixin China PMI Services (AUG) A 52.1 | 51.7 | P 51.6

GBP        Markit/CIPS UK Services PMI (AUG) A 50.6 | C 52 | P 51.4

GBP        Markit/CIPS UK Composite PMI (AUG) A 50.2 | P 50.7

EUR        Euro-Zone Retail Sales (YoY) (JUL) A 2.2 | C 2.0% | P 2.6% | R 2.8%

USD        MBA Mortgage Applications (AUG 30) A -3.1% | P -6.2%

USD        Trade Balance (JUL) A -$54.0b | C -$53.4b | P -$55.2b | R -$55.5b

CAD       Bank of Canada Rate Decision (SEP 4) A 1.75% | C 1.75% | P 1.75%

USD        U.S. Federal Reserve Releases Beige Book

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