Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

 

LMAX Close

USDJPY 108.072 | EURUSD 1.08992 | AUDUSD 0.67514 | NZDUSD 0.62613 | USDCAD 1.32408 | USDCHF 0.99796 | GBPUSD 1.22939 |

 

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               1.09005 | 1.0886

USDJPY                108.298 | 108.045

GBPUSD              1.22962 | 1.22783

USDCHF               0.99936 | 0.99761

AUDUSD             0.67770 | 0.67258

USDCAD              1.32519 | 1.32352

NZDUSD              0.62693 | 0.62379

EURCHF               1.08826 | 1.08737

EURGBP              0.88731 | 0.88616

EURJPY                117.959 | 117.75

For Today

  • GBP: Rising minimally through into the Tokyo session to set the high around the 1.2295 level before drifting and holding the opening 1.2290 level deep into the Tokyo session before testing the 1.2280 areas quickly before holding for a few hours before rising slowly back towards the opening level, Downside congestion remains through 1.2280 level before some weak stops competing with further congestion on a break through the level and bids likely to increase on any move towards the 1.2200-50 areas. Topside offers likely to be weak through to the 1.2400 level with limited congestion on any move through the level building steadily stronger the further through the 1.24 handle the market moves with strong offers particularly around the 1.2500 level.
  • JPY: Opening around the 108.05 area through deep into Tokyo before starting a slow rise through the session once the Tankan results were absorbed to push towards the 108.30 level for the move into the Tokyo session weakness likely to be connected to the weak cover ratio on today’s 10yr JGB auction, Topside offers through the 108 handle and stronger offers likely to be strong through to the 108.50 areas. Downside bids light through to the 107.00 level with strong bids in the area and weak stops likely to be through the 106.80 areas with stronger bids through the 106.60 level and congestion continuing through to the 106.00 level.
  • AUD: A quiet opening with the market lifting a little after the Japanese Tankan results to push towards the 0.6760 areas, having touched the level the market dipped steadily back in preparation to the RBA rate announcement, testing through to the 0.6735 area the market rose slowly from that point until the release and a spike higher through to the 0.6775 areas before dropping just as quickly testing through to the 0.6725 area with a weak bounce to hold around the 0.6730 area for the move into the grey hour, Topside offers light through to the 0.6780 level with some offers then holding through to the 68 cents level again and stronger offers through to the 0.6820 level with possible weak stops just above the level opening only a small space before running into likely congestive offers. Downside bids light through to the 0.6740 level and stronger bids in the area with bids likely to increase on any test to the 0.6720-00 level with weak stops limited through the 0.6680 level possibly covered by stronger congestion through to the 0.6650 areas.
  • EUR: A steady drift from early Tokyo testing from the opening 1.0900 area through to just below the 1.0890 level in very quiet trading for the Euro, Topside offers likely to be weak on any move through to the 1.1000 areas with congestion around the 1.1020 level and weak stops just beyond the level and opening the market through to the 1.1040-60 areas where congestion is likely, stronger offers then appear on any push through the 1.1080-1.1100 levels. Downside bids through the yesterday’s lows and then increasing as the market moves towards the 1.0890-70 areas, with stops likely on any dip through the 1.0880 areas and opening a longer-term downside move with some congestion around the 1.0860-40 areas and then increasing on any move to the 1.0820-00 areas.

 

 

Overnight News

EUR:

Lane blames trade unease as key factor for slower Europe growth – BBG

EU trade official says Europe must stand up for itself in aircraft subsidy fight with US – CNBC

AUD:

Australia Aug. Building approvals fall 1.1% MoM Est. 2% Gain

Doubt grows on tax refund stimulus as Australians shun accountants – SMH

RBA cuts cash rate to 0.75% as expected

RBA: Reasonable to expect extended period of low rates

RBA: Outlook for Global economy reasonable, risks tilted to downside

RBA: Will ease further if needed to support growth and meet inflation target

RBA: Gentle turning point for the economy appears to have been reached

RBA: Outlook supported by low interest rates, recent tax cuts, infra spending, signs of stabilization in housing

RBA: Outlook for consumption remains main domestic uncertainty

RBA: Took the decision to lower interest rates further today to support employment and income growth

RBA: Forward looking indicators of Labour demand indicate that employment growth is likely to slow from its recent fast rate

RBA: Economy still has spare capacity and lower interest rates will help make inroads into that

RBA AUD at its lowest levels of recent times

RBA: In both headline and underlying terms, inflation is expected to be a little under 2% over 2020 and a little above in 2021

JPY:

Japans Government Pension investment fund plans to expand its investment in foreign bond – Nikkei

NZD:

NZ lowers Labour participation rate amid series of revisions – BBG

KiwiBank now sees RBNZ cutting official cash rate to 0.5% – BBG

ASB Bank now expects RBNZ to cut cash rate to 0.5% BBG

 

Today’s Data

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

NZD       NZIER Business Opinion Survey A 92.4%

AUD       AiG Performance of Manufacturing index (SEP) A 54.7 | P 53.1

JPY         Jobless rate (AUG) 2.2% | C 2.3% | P 2.2%

JPY         Tankan Large all industry Capex A 6.6% | C 7.0% | P 7.4%

JPY         Tankan Large Manufacturers outlook (3Q) A 2 | C 0 | P 7

JPY         Tankan Large Manufacturing Index (3Q) A 5 | C 1 | P 7

JPY         Tankan Large Non-Manufacturing Index A 21 | C 20 | P 23

JPY         Tankan Small Non-Manufacturing Outlook A 1 | C 1 | P 3

AUD       Building Approvals YoY A -21.5% | C -20.0% | P -28.2%

AUD       RBA Cash rate Target (OCT 1) A 0.75% | C 0.75% | P 1.00%

0700       GBP       Nationwide House Price YoY (SEP) C 0.50% | P 0.60%

0730       CHF        Retail Sales Real YoY (AUG) P 1.4%

0830       CHF        PMI Manufacturing (SEP) C 46.5 | P 47.2

0930       GBP       Markit UK PMI Manufacturing C 47.0 | P 47.4

1000       EUR        Eurozone CPI Core YoY (SEP A) C 1.0% | P 0.9%

1000       EUR        Eurozone CPI Estimate YoY (SEP) C 1.0% | P 1.0%

1020       AUD       RBA Lowe speaks in Melbourne

1330       CAD       Gross Domestic Product MoM (JUL) C 1.4% | P 1.5%

1330       CAD       GDP MoM (JUL) C 0.1% | P 0.2%

1430       CAD       RBC Canadian Manufacturing PMI (SEP) P 49.1

1500       USD       ISM Employment (SEP) P 47.4

1500       USD       ISM Manufacturing (SEP) C 50.2 | P 49.1

1500      USD       Construction spending MoM (AUG) C 0.4% | P 0.1%

1500       USD       ISM Prices Paid C 50.5 | P 46.0

1530       MXN      Markit Mexico PMI Manufacturing (SEP) P 49.0

 

Harry Hindsight

 

  • GBP: Some movement over the course of the day but fairly contained overall, drifting from the early spike on the opening to above the 1.2300 level before drifting slowly through the session to hold around the 1.2285 area before moving into the grey hour and pushing back to the opening levels, early London pushed the market to above the 1.2300 level and after a pause again ran higher through to the 1.2330 level before dropping back and holding around the 1.2310 level to the opening in NYK, and after a dip back to the opening levels another steady rise and spiking on the break through the 1.2330 level to test lightly through to the 1.2340’s before falling back just as quickly to the opening levels and then drifting through to make the lows just below the 1.2280 area with a minor push through to set the low the market bouncing a little and the market then pushing the 1.2300 and a slow drift to the close.
  • JPY: Opening just short of the 108.00 level the market dipped on the Tokyo opening falling back to the 107.90 level and then attempting the topside a few times but never really getting the momentum to push through the level, the market then held around the 107.90 levels through into the grey hour before starting a steady drift lower to test through the 107.80 level and holding quietly around the level and setting the low around the 107.75 areas, The move into the London session saw the market recovering and pushing steadily through to just below the 108.00 level and only once the market pushed into NYK did it find the impetus to push through to the 108.10 level holding then through to the close testing only slightly higher but maintaining the 108 handle to the close.
  • AUD: Opening towards the high of the day the market struggled from the opening dipping to the 0.6750’s before again testing the 0.6760 level and eventually triggering a few weak stops to test the 0.6770 level before drifting through to the London session holding its lows around the 0.6755 level, the market through London saw the range resetting to trade around the 0.6750 levels and a slow tight range through into the NYK session, a limited rise through to above the 0.6760 level saw the market quickly dipping back holding for a period around the 0.6745 level and the lows just beyond before slowly rising from the area to the 0.6750 and the close.
  • EUR: Very quiet for the Euro through the Asian session drifting from the opening around the 1.0945 areas and then basing along the 1.0930 level through to the London session, the early London market saw the highs of the day just through to the opening level but short of the 1.0950 level and the market having tested to the level saw the market drifting through to the NYK session where the NYK traders sold sharply from the 1.0910 level to test to just below the 1.0890 area before a very short pause before pushing steadily back above the 1.0910 level then drifting to the close to finish below the figure level.

 

Yesterday’s Premiership results

NZD:      Building permits MoM (AUG) C 0.8% | P -1.3%

JPY:        Industrial production YoY (AUG P) A -4.7% | C -3.9% | P 0.7%

JPY         Large retailers’ sales (AUG) A 0.4% | C 0.8% | P -4.8%

JPY         Retail trade YoY (AUG) A 2.0% | C 0.7% | P -2.0%

NZD       ANZ Activity outlook (SEP) A -1.8% | P -0.5%

CNY        Manufacturing PMI (SEP) A 49.8 | C 49.6 | P 49.5

CNY        Composite PMI (SEP) A 53.1 | P 53

CNY        Non-manufacturing PMI (SEP) A 53.7 | C 53.9 | P 53.8

AUD       Private sector credit YoY (AUG) A 2.9% | C 3.0% | P 3.1%

CNY        Caixin China PMI manufacturing (SEP) A 51.4 | C 50.2 | P 50.4

JPY         Construction Orders YoY (AUG) A -25.9% | P 26.9%

JPY         Housing Starts YoY (AUG) A -7.1% | C -6.1% | P -4.1%

EUR        German retail sales YoY A 3.2% | C 2.9% | P 4.4%

CHF        KOF leading indicator A 93.2 | C 96.2 | P 97

EUR        German unemployment change (000’s) (SEP) A -10k | C 5.0k | P 4.0k

EUR        German unemployment Claims rate s.a. (SEP) A 5.0% | C 5.0% | P 5.0%

GBP       Consumer credit YoY (AUG) A 5.4% | P 5.5%

GBP       GDP YoY (2Q F) A 1.3% | C 1.2% | P 1.2%

GBP       Mortgage approvals (AUG) A 65.5k | C 66.5k | 67.3k

GBP       Net Consumer Credit (AUG) A 0.9b | C 0.9b | P 0.9b

GBP       Net Lending Sec. on dwellings (AUG) A3.9b | C 4.2b | P 4.6b

EUR        Eurozone unemployment rate (AUG) A 7.4% | C 7.5% | P 7.5%

EUR        German CPI YoY (SEP P) A 1.2% | C 1.3% | P 1.4%

EUR        German CPI EU Harmonized YoY (SEP P) A 0.9% | C 1.0% | P 1.0%

EUR        German CPI MoM (SEP P) A 0.0% | C 0.0% | P -0.2%

EUR        German CPI EU Harmonized MoM (SEP P) A -0.1% | C 0.0% | P -0.1%

USD       Chicago Purchasing Manager (SEP) A 47.1 | C 50.0 | P 50.4

 

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