Daily FX Market Commentary

Andy Harrison

Andy Harrison

LMAX Close
USDJPY 106.911 | EURUSD 1.09635 | AUDUSD 0.67416 | NZDUSD 0.63075 | USDCAD 1.33373 | USDCHF 0.99896 | GBPUSD 1.23303 |

LMAX highs and Lows 05.00 GMT
Highs | Lows
EURUSD 1.09838 | 1.09517
USDJPY 106.928 | 106.747
GBPUSD 1.23569 | 1.23307
USDCHF 0.99957 | 0.99803
AUDUSD 0.67595 | 0.6740
USDCAD 1.33396 | 1.33243
NZDUSD 0.63283 | 0.62969
EURCHF 1.09684 | 1.09517
EURGBP 0.88984 | 0.88846
EURJPY 117.363 | 117.171
For Today
• GBP: opening around the 1.2330 areas the market struggled through the session to test above the 1.2355 level before slowly slipping back to the opening levels through into the grey hour, Downside bids cleared a little through to the 1.2210 area with strong bids likely to remain in play before weak stops likely on a push through the 1.2200 areas and opening up a deep move through to the 1.2100 area before support is likely to reappear, topside offers cleared through to the 1.2340 areas with resistance through the sentimental 1.2350 areas with weakness likely to continue through to the 1.2380-1.2400 areas where stronger offers likely.
• JPY: A steady drift through the session from the opening around the 106.90 areas testing through to the grey hour holding the 106.75 areas, Topside offers light through to the 108.50 areas with limited resistance through the level but increasing on any move towards the 108.80-109.00 area with weak stops limited above the 109.20 areas. Downside bids into the 106.50 areas with strength likely to be in that area with congestion likely on any push through towards the 106.00 areas and possible stronger stops on a push through the 105.80 areas and a concern then for the BoJ.
• AUD: A slow rise from the opening pushing from the 0.6740 area and although there was a limited dip on the move into the Tokyo session saw the market holding and pushing steadily through to the 0.6760 area before drifting to the grey hour, Downside bids through to the 0.6680 level with weak stops likely on a dip through the 0.6670 level with congestive bids then likely to be patchy but centred around the sentimental 50/00 areas, topside offers light through to the 68 cents level before stronger selling is likely to appear even a push through the 0.6820 area and weak stops are likely to find sellers willing to move in on the moves.
• EUR: As with the other markets the Euro rose from the opening testing through to the 1.0980s before drifting back towards the 1.0975 areas, 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
AUD:
RBA: Tells banks not to be overly cautious
RBA: Financial stability review, housing market is a key source of potential systemic risk, needs to be monitored closely
RBA: Risks in household sector from falling home prices have receded somewhat but still exist
RBA: Resilience of Australian financial system has improved
RBA: Recent tightening of lending standards has improved quality of new lending
RBA: Excessive risk aversion by banks can curtail credit supply
RBA: Rising unemployment, ongoing weak income growth a risk for Australia housing market, debt
RBA: If unemployment were to rise, risks associated with negative equity would increase
RBA: Global uncertainties have increased since last review in April with greater chance of weak growth
RBA: Spill overs from tensions in HK, Middle East and Britain could also trigger a slowdown
RBA: There are many possible triggers for dislocation in financial markets currently
USD/CNY:
Navarro: There will be no small deal with China – BBG
Navarro: Will get great China deal or no deal – BBG
Navarro: The economy is strong – BBG
Trump told Xi he’d stay quiet on HK amid trade talks – CNN
USD:
Elizabeth Warren calls for public release of transcript of Trump-Xi call – BBG
Clarida: Focus of the Fed is to keep US economy in a good place
Clarida: The Economy is in a good place economic growth is solid and consumer is in a good place
Clarida: Economy is slowing and affecting US exports and manufacturing
Clarida: Fed is not on a preset course and takes each meeting one at a time
Clarida: Repeats FED will act as appropriate
Clarida: Uncertainty about trade policy is impacting investment
Clarida: He doesn’t think recession risks are elevated
GBP:
Up to 30 Labour rebels could turn against Jeremy Corbyn – Sun
Boris Johnson has scrapped a Therese May promise to the EU that Britain will abide by level playing – TWT
If the EU rejects Boris’s offer, its full steam ahead for a no-deal Brexit – TEL

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC
0830 EUR Markit Germany Construction PMI (SEP) P 46.3
1330 USD Change in Non-Farm Payrolls (SEP) C 145k | P 130K
1330 USD Unemployment Rate (SEP) C 3.7% | P 3.7%
1330 USD Average Hourly Earnings YoY (SEP) C 3.2% | P 3.2%
1330 USD Average weekly Hours all employees (SEP) C 34.4 | P 34.4
1330 USD Change in Private Payrolls (SEP) C 130k | P 98k
1330 USD Trade Balance (AUG) C $54.5b | P 54.0b
1800 USD Baker Hughes US Rig Count C 851 | P 860
1900 USD Powell Makes Opening remarks at Fed Listens event

Harry Hindsight

• GBP: A fairly quiet Asian session saw the market moving around the 1.2300 level through to the London session with barely a 10 pip range over the course of the session, the move into the London session initially saw the market dipping through to the 1.2270 level as sellers pushed the market lower into London’s officially opening then bouncing back and trading steadily through to the 1.2325 areas over the next couple of hours before dipping again into the 1.2270’s before starting a strong steady climb through into the NYK session testing steadily above the 1.2370 level before pausing but continuing the run higher and pushing just beyond the 1.2400 level holding in the 1.2400-10 area for a couple of hours before starting a long drift to the close and holding the 1.2325 areas to the close.
• JPY: Limited range for the most part with the market holding the opening 107.15-20 area through into Tokyo before some supply saw the market dip for the first time through to the 107.00 level with a light bounce and a return to the opening level, the move through the grey hour saw the market pushing to the highs for the day testing the 107.30 level before drifting through the London session again testing the 107.00 level and pushing lightly through to the 106.90 level before pushing into the NYK session, US numbers out of the way a sudden drop of USDJPY in what looked like a strong single move took the market through to the 106.50 level before finding sufficient support to curtail the stop sellers and the market slowly ground through to the 106.90 areas for the close.
• AUD: A slow steady climb over the session with the Tokyo session slowly pushing through to the 0.6720 areas from the opening just above the 67 cents level, a dip through to the lows of the day in an attempt to break back through the figure failed before rising slowly through to the NYK session and a quick round of USD selling and the Oz quickly gaining to the 0.6740 level and then a steady grind through to the 0.6750 areas and ranging around the level deep into the evening session before drifting a little through to the close.
• EUR: Limited range for the Euro through to NYK with the market holding through the Asian session trading around the opening 1.0960 level before drifting a little through to the London opening and dipping through to the low just above the 1.0940 area, the run through into the NYK session with a little bit of choppiness moving in with the range expanding from the 1.0940’s through to just above the 1.0970 area before rising quickly on the USD move testing towards the 1.1000 level before holding just below the area and then dipping through to the close to hold the 1.0970 areas.

Yesterday’s Premiership results
AUD AiG Performance of Service Index (SEP) A 51.5 | P 51.4
AUD Trade Balance (AUG) A A$5926m | C A$6100m | P A$7268m
GBP Markit/CiPS UK Composite PMI (SEP) A 49.3 | C 50 | P 50.2
GBP Markit/CiPS UK Services PMI (SEP) A 49.5 | C 50.3 | P 50.6
EUR Eurozone Retail Sales YoY (AUG) A 2.1% | C 2.0% | P 2.2%
USD Continuing Claims (SEP21) A 1651k | C 1654k | P 1650k
USD Initial Jobless Claims (SEP28) A 219k | C 215k | P 213k
USD ISM Non-Manufacturing/Services Composite (SEP) A 52.6 | C 55.1 | P 56.4
USD Durable Goods Orders (AUG F) A 0.2% | P 0.2%
USD Factory Orders (AUG) A -0.1% | C -0.2% | P 1.4%

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