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Risk FX Caught in Choppy Trade

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Top Stories

  • SNB comes in again on EU open trying to push USDCHF towards 80 EURCHF 115
  • UK Retail Sales miss slightly at 0.2% vs. 0.3% eyed
  • Nikkei off -1.25% Europe -1.19%
  • Oil at $87.04/bbl
  • Gold nears $1800/oz again $1794/oz. last

Overnight Eco

  • GBP Retail Sales (YoY) (JUL) 0.0% vs 0.1%
  • GBP Retail Sales (MoM) (JUL) ) 0.2% vs. 0.3%

Event Risk on Tap

  • USD Consumer Price Index (MoM) (JUL) expected at 0.2%
  • USD Consumer Price Index Ex Food & Energy (MoM) (JUL) expected at 0.2%
  • USD Consumer Price Index (YoY) (JUL) expected at 3.3%
  • USD Consumer Price Index Ex Food & Energy (YoY) (JUL) expected at 1.6$
  • USD Philadelphia Fed. (AUG) expected at 4
  • USD Existing Home Sales (JUL) expected at 4.94M
  • USD Existing Home Sales (MoM) (JUL) expected at 3.5%
  • CAD Leading Indicators (MoM) (JUL)

Price Action

  • USD/JPY holds still at 76.60
  • AUD/USD pushed lower through 1.0500 on weak equity flows
  • GBP/USD rallies to 1.6550 but stalls after UK Retail Sales
  • EUR/USD propped to 1.4450 but sell offs in mid morning trade

Very choppy trade in currency market in overnight European dealing as EUR/USD jumped to 1.4450 on Middle Eastern demand and further SNB intervention through EUR/CHF only tumble below the 1.4400 figure by mid morning trade. With no economic data on the calendar the pair was hostage to risk flows throughout the night frustrating both longs and shorts as it struggled to find direction.

Another spike in CHF pairs helped fuel EUR/USD demand early as EUR/CHF verticalized through the 115 handle while USD/CHF came very close to .8000. The SNB appears to have these levels in mind as the absolute lowest basis that they will accept. Swiss companies are already reporting that the higher franc is impinging on their ability to do business and Swiss authorities remain highly concerned about the dynamics in the FX market. Traders remain wary of some sort an announcement regarding a peg which many fear may come over the weekend to exert maximum pain on the shorts.

Meanwhile in UK Retail Sales printed slightly lower than expected at 0.2% versus 0.3% but remained positive for the second month in a row indicating that consumer demand remain relatively stable despite challenging labor market conditions and chronically high inflation. Food store sales rose by 0.7% but were offset by declines in textiles, clothing and footwear which decreased by 0.1% In a year on year comparison Retail Sales were flat at 0.0%.

Overall UK consumer demand continues to be tepid and analysts believe that the next several months will challenging given the anticipated negative impact of higher utility bills and lackluster labor conditions which will crimp discretionary spending going forward.

Cable fell then rallied then fell again in reaction the news as the price action reflected the mixed sentiment of the market. Over the past several days sterling has been able to shrug off negative economic data with the pair barreling through the key 1.6500 barrier yesterday. If that level can hold into the North American session cable could try to push higher towards the 1.6600 figure as longs press their trades.

In North American trade we will get a slew of economic data including jobless claims, LEI, Philly Fed and housing numbers. If the news surprises to the upside risk flows could help fuel euro and cable higher as the day progresses, but if the data turns dour, risk currencies could revisit their lows as the choppy trade continues to dominate currency markets.

FX Upcoming

Currency GMT EST Release Expected Prior
USD 12:30 8:30 Consumer Price Index (MoM) (JUL) 0.2% -0.2%
USD 12:30 8:30 Consumer Price Index Ex Food & Energy (MoM) (JUL) 0.2% 0.3%
USD 12:30 8:30 Consumer Price Index (YoY) (JUL) 3.3% 3.6%
USD 12:30 8:30 Consumer Price Index Ex Food & Energy (YoY) (JUL) 1.6% 1.6%
USD 14:00 10:00 Philadelphia Fed. (AUG) 4 3.2
USD 14:00 10:00 Existing Home Sales (JUL) 4.94M 4.77M
USD 14:00 10:00 Existing Home Sales (MoM) (JUL) 3.5% -0.8%
CAD 12:30 8:30 Leading Indicators (MoM) (JUL) 0.2%

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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