Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 121.439 | EURUSD 1.10253 | AUDUSD 0.72304 | NZDUSD 0.66354 | USDCAD 1.35786 | USDCHF 0.98311 | GBPUSD 1.51808 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.75 | 121.28

EUR/USD             1.1025 | 1.0997

EUR/JPY               134.10 | 133.625

AUD/USD            0.7335 | 0.7222

NZD/USD             0.6782 | 0.6719

USD/CAD             1.3580 | 1.3548

EUR/CHF              1.0844 | 1.0834

USD/CHF             0.98515 | 0.9832

GBP/USD             1.5197 | 1.5171

EUR/GBP             0.7261 | 0.72475

For Today

• EUR: Opening around the 1.1020 area the market moved quietly through the session with cross selling of the Euro dominating the market with early EURJPY selling then slipping into EURAUD selling on the back of the Oz numbers, the market in Euro’s gradually moved to the 1.1000 areas on the gradual selling. Topside offers from the 1.1040 levels with light congestion through to the 1.1060 areas with a little weakness before stronger offers start to appear as the market moves through the 1.1080 level and continuing through the 1.1100 levels with the likelihood of weak stops then appear quickly with the 1.1200 areas opening the topside for further tests beyond the level, downside bids light through the 1.1000 levels with slightly better bids into the 1.0980 areas however, the downside still remains weak and the market is likely to need some consolidation to crystalize the gains yesterday, a push through those 1.0980 levels does expose the 1.0920 levels and any further weakness will allow the market to test to the 1.0800 levels and negating yesterday’s moves.
• GBP: Another dull day for the Cable with the market opening around the 1.5180 levels and initially testing the resistance on the topside and unable to test through the 1.5200 levels before drifting into the 1.5170’s where the market traded around the levels for the balance of the session. Topside offers into the 1.5200 levels with some congestion through the level and into the 1.5250 areas before opening the topside for a further attempt at the 1.5300 levels and likely reasonable offers with possibly close weak stops on a move through the levels and then opening the market to a stronger move for a test into the 1.5500 ultimately. Downside bids light into the 1.5150 areas and then stronger bids possibly into the 1.5100 levels with congestion around those levels, a dip through as has happened a number of times will open fresh attempts to the 1.5000 with the market still looking for strength above the 1.5000 levels.
• JPY: The opening saw some buying of both USDJPY and EURJPY with the USDJPY moving from the 121.50 areas to test towards the 121.80 level into the Tokyo opening however, once the session started EURJPY selling materialized quickly with reasonably strong selling sufficient to push both the EURUSD leg and USDJPY leg lower and the USDJPY dipped to the 121.30 levels, a steady recovery then ensued with the market steadily rising back the 121.70 areas before running out of steam. Topside offers light through the 122.00 areas and once through the 122.30 level the market is likely to see weak stops appearing and the market then having the ability to rise through to the 122.80 levels and possibly stronger offers from then on. Downside buyers light through to the 121.20 areas and then stronger bids appear with the market, the market is likely to continue seeing bids through the 121.00 level and while there maybe be some light stops through the 120.70 areas the market then sees limited bids into the 120.50 areas before the stronger levels into the 120.50 area.
• AUD: The Oz saw steady pressure as the NZD rate cut seemed to create confusion after several comments from Wheeler and the RBNZ suggested that this could lead to inflationary pressures building but leaving the ability to cut further, NZD rose higher and so the Oz weakened a little going into the new session however, the move into the Tokyo session saw the market rising again and from the 0.7220 levels pushed through the 0.7240 areas before the release of the employment data, which is beginning to draw commentary about how the numbers are correlated with another drop in unemployment to 5.80% and a rise of 71.4K against an expected drop in employment, with the discussions going along the line that the mining industry is pushing through redundancies and this is not being seen in the numbers however, the numbers saw the market quickly leap from the 0.7240 areas to test quickly into the 0.7330 levels before struggling to push through the 0.7340 area and drifting lower as the doubting Thomas’s appear, Topside offers just above the highs and likely to continue to the 0.7360 and then increasing in size as the market pushes through the 0.7380 and into 0.7400 levels. Downside bids light all the way through to the previous levels with bids likely to be a little stronger into the original 0.7240 levels with bids continuing through the 72 cent level and into the 0.7180 areas.

Overnight News

AUD:

Australian Nov. Employment Rose 71,400 M/M; Est. 10,000 Fall

CNY:

Recent Yuan Devaluation Due to USD Appreciation: China SAFE

JPY:

Japanese Bought Net 73.1 Billion Yen Overseas Debt Last Week

Japan Ruling Coalition to Agree to Lower Food Sales Tax: Nikkei

Japan to Cut Corporate Tax Below 30% Next Fiscal Year: LDP Plan

Suga: Not Clear Whether Abe Website Attacked by Anonymous

Suga: Not Clear Whether Abe Website Attacked by Anonymous

JPY/INR:

Japan to Back 1.5t Yen Program for Domestic Cos in India: Nikkei

NZD:

RBNZ Signals Rate on Hold Not Only by Words But Also by Forecast

N.Z. November Median House Price Rises 0.8% Y/Y, REINZ Says

ZAR:

S&P Says It’s Focusing on If S. Africa Controls Deficits, Debt

GBP:

U.K. Nov. RICS House Price Index at 49 vs Est. 48

Today’s data

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

NZD       RBNZ Rate Decision A 2.50% | C 2.50% | P 2.75%

JPY         BSI Large Manufacturing Q/Q Q4 A 3.8 | C 12.1 | P 11

JPY         Domestic CGPI Y/Y Nov A -3.60% | C -3.80% | P -3.80%

AUD       Consumer Inflation Expectation Dec A 4.00% | P 3.50%

GBP       RICS House Price Balance Nov A 49% | C 47% | P 49% | R 50%

AUD       Employment Change Nov A 71.4K | C -10.0K | P 58.6K | R 56.1K

AUD       Unemployment Rate Nov A 5.80% | C 6.00% | R 5.90%

08:30     CHF        SNB Sight Deposit Interest Rate C -0.75% | P -0.75%

09:30     GBP       Visible Trade Balance (GBP) Oct C -9.8B | P -9.4B

12:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

12:00     GBP       BoE Asset Purchase Target Dec C 375B | P 375B

12:00     GBP       MPC Official Bank Rate Votes C 1–0—8 | P 1–0–8

12:00     GBP       MPC Asset Purchase Facility Votes C 0–0—9 | P 0–0–9

13:30     CAD       Capacity Utilization Rate Q3 P 81.30%

13:30     CAD       New Housing Price Index M/M Oct C 0.10% | P 0.10%

13:30     USD       Import Price Index M/M Nov C -0.70% | P -0.50%

13:30     USD       Initial Jobless Claims (DEC 5) C 266K | P 269K

19:00    USD       Monthly Budget Statement Nov C -68.2B | P -136.5B

Harry Hindsight              

• EUR: A steady rise for the Euro and selling in the USD especially against the JPY as GPIF head indicates a period of hedging overseas holdings, moving from just below the 1.0900 levels the market initially tested the 1.0880 areas into early Tokyo before starting a steady rise moving into the grey hours pushing above the 1.0920 levels and light offers, a quiet period until the market moved closer to the NYK opening and the market moving steadily higher as USD selling increased and the market moved up to the 1.0980 levels before moving into the NYK and the selling continued with the market pushing steadily through to the 1.1000 triggering some light stops and quickly moving through 1.1020 before steadily rising to 1.1040’s and drifting to the close.
• GBP: Cable kept pace with the Euro rise for the most part with a steady rise once the market moved into the London session, opening around the 1.5010 areas and although the market struggled through the Asian session testing now further than the 1.5020 areas, the move into the grey hours and the market started to make some headway pushing to the 1.5040 levels and into the official opening, EURGBP remained in a tight range through the London session, and only started to move out of the 0.7250-70 range into the NYK session with the cross dipping to the 0.7220 levels on strong EURGBP selling and a stronger Cable as the market played catch up having missed the initial USD selling in Asia, the cross recovered as London wrapped up for the day and Cable topped around the 1.5180 areas and ranged between there and 1.5160 to the close.
• JPY: USDJPY opened around the 122.90 areas and although early buying took the market to above the 123.00 level into early Tokyo before the market started to drift off, the release of the GPIF story then weakened the USDJPY further and the market dipped to the 122.60’s into the grey hours and while the London market was less inclined to move on the news with the market holding around those low areas, the move into NYK was more inclined to drop quickly with the market testing through the 122.00 levels and into the 121.80 areas before finding some bids, however, the next move lower steadily pushed through the 122.00 levels and the 121.80 buckled and the market tested steadily to the 121.05 areas before finding sufficient support to hold the market and a limited bounce to the 121.40 areas into the close.
• AUD: The Oz remained fairly range bound through the session with the market opening around the 0.7220 levels and moving around that level through the Asian session, London were sellers into the open and the market was able to push through the 72 cent for the first time and trade into the 0.7170 levels before finding sufficient buyers to steadily return it to test the topside offers into the 0.7240 levels which generally held and were tested again towards the close with the same result.

Yesterday’s premiership results

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

AUD       Westpac Consumer Confidence Dec A -0.80% | P 3.90%

JPY         Machine Orders M/M Oct A 10.70% | C -1.50% | P 7.50%

AUD       Home Loans Oct A -0.50% | C -1.00% | P 2.00%

CNY        CPI Y/Y Nov A 1.50% | C 1.40% | P 1.30%

CNY        PPI Y/Y Nov A -5.90% | C -6.00% | P -5.90%

JPY         Machine Tool Orders Y/Y Nov (P) A -17.9% | P -22.90%

CHF        Unemployment Rate Nov A 3.40% | C 3.40% | P                3.40%

EUR        German Trade Balance (EUR) Oct A 20.8B | C 19.2B | P 19.4B

USD       Wholesale Inventories Oct A -0.10% | C 0.00% | P 0.50% | R 0.20%

USD       Crude Oil Inventories A -3.6M | C 0.7M | P 1.2M

NZD       RBNZ Rate Decision A 2.50% | C 2.50% | P 2.75%

 

Good Luck,

Andy

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