Forex news and economic trading headlines 26 July 2016

News:

  • Priest killed in French church attack
  • BOE's Weale says policy action in August unlikely to boost economy before next year
  • Japan's Aso says they have yet to decide on size of economic stimulus package
  • Cable bounces from 1.3050 support
  • Large option expiries cast a shadow again
  • RBI's Rajan says central bank independence is necessary for stable growth
  • EU Comission spokesman says they are mulling sanctions on Spain and Portugal tomorrow
  • AUD and NZD both rally sharply despite yen demand
  • Option expiries 10 am NY cut today 26 July
  • Nikkei 225 closes down -1.43% at 16,383.04

Data:

  • June 2016 UK BBA mortgage approvals 40,103 vs 39,650 exp
  • Spain PPI June mm +1.8% vs +0.8% prev

A lively session with the pound and yen again in focus.

The session started with yen demand after comments from Japanese fin min Aso added to the disappointment that the BOJ may not be doing much by way of stimulus on Friday. Having already tumbled in Asia we saw a rapid move from 104.80 to 104.30 dragging yen pairs lower too.

GBPJPY supply saw GBPUSD knocked down through 1.3100 already on the back foot from comments by MPC'S Weale turning from hawk to dove. We wiped feet at 1.3080 but then looked at the strong support at 1.3050 with 1.3058 being posted before shorts took money off the table and GBP bulls added to longs.

As USDJPY held 104.00 in a second wave of selling we saw GBPJPY rally and taking both core pairs with it. GBPUSD rising to 1.5153 and USDJPY 104.47 so far.

EURUSD has been underpinned by large option interest at 1.1000 and EURCHF which may well have had a helping hand to 1.0882 from 1.0845 with USDCHF holding support at 0.9830. SNB smoothing can't be ruled out.

AUDUSD and NZDUSD both surged in early trading as traders got cold feet on shorts and stops were triggered in a rapid rally. AUDUSD went from 0.7490 to 0.7537 in a rush led by NZDUSD eventually posting 0.7086 from 0.7015

USDCAD has been pulled around between 1.3180 -1.3240 by oil first dipping then recovering some poise. Equities have had a mixed morning.

Not a lot to report data wise but that's not stopping these summer markets from bringing some opportunity.