Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 123.94 | EURUSD 1.09862 | AUDUSD 0.72959 | NZDUSD 0.66768 | USDCAD 1.29449 | USDCHF 0.96793 | GBPUSD 1.56071 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               124.19 | 123.88

EUR/USD             1.09895 | 1.09595

EUR/JPY               136.27 | 135.98

AUD/USD            0.7322 | 0.7288

NZD/USD             0.6668 | 0.6622

USD/CAD             1.2960 | 1.2944

EUR/CHF              1.06345 | 1.0618

USD/CHF             0.9690 | 0.9670

GBP/USD             1.5609 | 1.5590

EUR/GBP             0.7041 | 0.70275

For Today

• EUR: Euro’s slipped lower having held around the 1.0990 levels into the early pre-Tokyo session, EURAUD selling as technical traders moved in onto the breaking head and shoulders pattern in the cross, and while the Oz held its own the Euro crumpled triggering weak stops and a move to the 1.0960 level before regaining some of its loses to hold in the 1.0970-80 levels. Topside offers weark through the 1.1000 levels and a push through the stronger 1.1030 levels is likely to meet more stubborn resistance however, the market does not seem to be too heavily populated until the market starts to move back towards the highs of yesterday around the 1.1080-1.1100 areas with those offers likely to continue through the figure area, a push through the 1.1130 levels will likely open the market a little however, the 1.1150 is likely to see plenty of mixed orders in a move towards the 1.1200 levels. Downside bids are likely to start appearing on a break through the 1.0960 level however, the bids are likely to eventually reappear in sufficient size to slow the move lower and into the 1.0920 levels a push here though will open the market up with chances of a light bidding area quickly melting away as the market pushes through the 1.0900 areas and fresh stops through 1.0880-70. Confidence numbers and German CPI of importance in the London session with the economic bulletin, GDP numbers into the NYK session could have a greater impact.
• GBP: Cable had a very quiet session moving around the 1.5600 levels with a 20 pip range over all with the market focused more on the Euro for the moment and no data or news expected for the UK, EURGBP slipped 10 pips through the session more from a lack of interest in GBP while the Euro dipped than anything else. Topside offers a little thin on the ground until the highs of yesterday with the 1.5690 level likely to hold offers into the 1.5700 then congestive offers over the next 50 pips likely before the possibility of a move to test the 1.5800 area with the market open through the level. Downside bids are likely to continue to the 1.5550 areas with a possibility of weak stops through the 1.5500 areas if it has the impetus to trade there, direction for the day is likely to come from the EURGBP during London and the GDP numbers in the NYK session.
• JPY: So the only thing that seems to be moving towards 2% is Abe’s popularity with several polls showing support for the PM and his policies ebbing drastically over the past few weeks and his goals as unlikely to reach fruition, needless to say USDJPY saw buying into the fix having seen early trading pushing the USDJPY to the 123.90 levels before moving steadily through to test the 124.20 areas and then trading quietly from that point holding the 124.10 levels. Topside offers continue through to the 124.50 with only limited stops in any mix, a push through the 124.50 levels could possibly see further strength for the USDJPY however, the fact that the last time the market moved to the level Kuroda spoke on the subject and since has kept the USDJPY on the 123 handle for the second half of the month, one would expect stronger offers however, if the market were to make a move into the NYK session and then stops appearing on a break through the 125.10 areas before further offers appear once the spike has run its course. Downside bids light to the downside until the market moves to below 123.50 there the market is likely to see bids start to appear and increase as it moves to the 123.00 areas with possibly better bids on any attempt to push through the 122.50 areas.
• AUD: The Oz spent much of the day being buffeted by cross trading with EURAUD breaking lower while AUDNZD rose on more poor news for the farmers in NZ, moving from the 0.7295 opening levels the Oz first tested slightly lower as AUDNZD with the AUDUSD struggling for a short period as the NZ dragged a little however, having tested the 0.7285 areas the EURAUD selling saw the Oz rise as the Euro leg struggled lower and the weaker Oz buying buoyed the market through into Tokyo and a push back through the 73 cent level, the pattern continued through the session with RBA’s Steven’s talking on China raising hopes for the faltering economy, and the Oz made a little headway to the 0.7320 areas before running into light offers in a quiet market overall. Topside offers likely from the 0.7340 areas and a push through the 0.7360 area will possibly see weak stops and an opening to test 74 cents, from there though the market does seem to have enough detractors for better offers to appear in a quiet market however, USD GDP will be one to watch. Downside bids likely through the 0.7280 levels and continue to the stronger lows made earlier in the weak around the 0.7260 areas, a break through the 0.7250 will possibly see a mixture of breakout stops and weak ones for a test of the 72 cent level and possibly light option plays and then through the level and possible stronger bids.

Overnight News

JPY:

BOJ’s Ishida: Best to Look at CPI Excluding Energy for Now

Japanese Sold Net 21.7 Billion Yen Overseas Debt Last Week

Japan June Industrial Production Rises 0.8% M/m; Est. +0.3%

AUD:

Australia June Building Approvals Fell 8.2% M/M; Est. 1% Fall

AUD/CNY:

RBA’s Stevens Sees Large Capital Flows from China Liberalization

NZD:

English Says NZ Dollar Fall to Make Industries More Profitable

New Zealand Central Bank Says It Bought Net NZ$8M in June

SGD:

Singapore Seasonally-Adjusted Jobless Rate at 2% Last Quarter

EUR:

EU’s Oettinger Opposes Greek Debt Cut: Hamburger Abendblatt

Today’s data

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

22:45     NZD       Building Permits M/M Jun A -4.10% | P 0.00%

23:50     JPY         Industrial Production M/M Jun (P) A 0.80% | C 0.30% | P -2.10%

01:30     AUD       Import Price Index Q/Q Q2 A 1.40% | C 1.50% | P -0.20%

01:30     AUD       Building Approvals M/M Jun A -8.20% | C -1.00% | P 2.40%

07:00     CHF        KOF Leading Indicator Jul C 90.3 | P 89.7

07:55     EUR        German Unemployment Change Jul C -5K | P -1K

07:55     EUR        German Unemployment Rate Jul P 6.40%

08:00     EUR        ECB Economic Bulletin

09:00     EUR        Eurozone Economic Confidence Jul C 103.2 | P 103.5

09:00     EUR        Eurozone Business Climate Indicator Jul C 0.19 | P 0.14

09:00     EUR        Eurozone Industrial Confidence Jul C -3.4 | P -3.4

09:00     EUR        Eurozone Services Confidence Jul C 8 | P 7.9

09:00     EUR        Eurozone Consumer Confidence Jul (F) C -7.1 | P -7.1

12:00     EUR        German CPI M/M Jul (P) C 0.20% | P -0.10%

12:00     EUR        German CPI Y/Y Jul (P) C 0.30% | P 0.30%

12:30     USD       GDP (Annualized) Q2 (A) C 2.60% | P -0.20%

12:30     USD       GDP Price Index Q2 (A) C 1.50% | P 0.00%

12:30    USD       Initial Jobless Claims (JUL 25) C 271K | P 255K

Harry Hindsight              

• EUR: Renewed cross buying again saw the Euro rising in Asia pushing to the 1.1080 levels from the opening around 1.1060 before heading towards the end of the session drifting back to test those opening levels and pushing through into the grey hours, preopening saw the market pushing the 1.1040 areas and London were quick sellers on the opening however, the market was unable to push below the 1.1030 areas, the market rose again to the 1.1070 before moving into the NYK session and then traded slowly lower into the 1.1010 levels before the FOMC, as you’d expect no change on the official number and the market quickly spiked on that announcement to trade to the 1.1080 levels before dropping quickly back and lower as the chatter started and the communique entered the market, with the change of wording from improvements in employment to some further improvement suggesting that they are close to lift off (their terms) however, before the market gets away from itself the weekends release of data suggested that although rates into December would be higher it would be only 10bps, whether this is a model only and suggestive of nothing concrete the market did take it on board but limited in reaction. The market from the commentary saw a decline to spike through the 1.0970 level before finding a true base around the 1.0980/90 levels into the close.
• GBP: Losses in the Euro were to the benefit of the GBP with Cable trading quietly through the Asian session moving around the 1.5610 level for most of the session and unable to push above the 1.5620 levels before slipping to its lows into the London opening, holding the 1.5590 levels the market lifted higher from the numbers and the market again pushed to the 1.5620 levels and eventually and slowly moved through to the 1.5640 levels and holding until the NYK session opened and the market found fresh impetus to move steadily to the 1.5690 levels, the move failed and steady selling in the EURGBP ran its course with the cross moving from the highs in Asia to the 0.7040 levels into NYK and light profit taking saw the Cable quickly drop before the FOMC release. The release saw some minor gyrations with the market spiking through the 1.5650 levels however, the end result was for the market to push through the opening levels and pushing to the 1.5600 areas into the close.
• JPY: With the general trend of the market for the run up to the FOMC release the USDJPY saw selling through the Asian session to take the market from the 123.60 opening levels before slowly reversing and then pushing through the opening for the lows around 123.35 to trade to the 123.70 levels in limited action, the market then held the levels around the 123.60-70 areas into the NYK session before rising again to 123.90 and holding steady into the release then dropping quickly to the 123.55 areas before snapping back to the 124.00 levels and holding above the 123.90 from there to the close.
• AUD: Early trading saw the market holding the 0.7345-50 areas into the Tokyo session news that mortgage banks are now under pressure to increase the ability to cope with non performing debt, this led to the Oz dropping back through the Asian session to the 73 cent level into the London session, the market then remained in a tight range through the London session moving around a little into the NYK session the range only increased a little before the release of the FOMC levels with the market spiking initially towards the opening highs before testing below 73 cents to trade to the 0.7285 levels and a quiet close sub 73 cents.

Yesterday’s premiership results

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

JPY         Retail Trade Y/Y Jun A 0.90% | C 1.00% | P 3.00%

CHF        UBS Consumption Indicator Jun A 1.68 | P 1.73 | R 1.62

EUR        German GfK Consumer Sentiment Aug A 10.1 | C 10.1 | P 10.1

GBP       Mortgage Approvals Jun A 66.6K | C 66.0K | P 64.4K

GBP       M4 Money Supply M/M Jun A -0.50% | C 0.40% | P 0.50%

GBP       CBI Reported Sales Jul A 21 | C 29 | P 29

USD       Pending Home Sales M/M Jun A -1.890% | C 1.00% | P 0.90% | P 0.60%

USD       Crude Oil Inventories A -4.2M | C -0.1M | P 2.5M

USD       FOMC Rate Decision A 0.25% | C 0.25% | P 0.25%

Good Luck,

Andy

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